These appeals are by assessee pertaining to assessment years 1975-76 to 1977-78. 2. assessee is one of co-owners of property at No. B-5, Jangpura Extension, New Delhi. In assessment years 1973-74 and 1974-75, Tribunal Delhi Bench 'B' while deciding IT Appeal Nos. 1377 and 1378 (Delhi) of 1979 held that income from letting on hire of building in question and of air-conditioning plant were inseparable and as such whole income w s assessable as income from house property. In years under consideration similar matter came for decision before Tribunal. bench felt that decision taken by earlier Bench requires reconsideration and as such Hon'ble President on request of Bench constituted Special Bench for deciding following question: "Whether, on facts and in circumstances of case, income from lease of property has to be assessed as income from property under section 22 and income from provision of air-conditioning services would be assessable under head 'Income from other sources' (under section 56 of Income-tax Act, 1961)?" 3. assessee along with other co-owners acquired leasehold rights over plot of 1500 sq. yds. and entered into agreement with Siemens India Ltd. on 22-6-1970. According to said agreement, assessee agreed to construct building for office premises for use of lessees on said land with all amenities described in agreement and demised same along with such amenities on terms and conditions agreed to. One of stipulation in agreement was that it shall provide window type air-conditioners and lessee shall pay rent for building at specified rate. It was further provided that in addition to rent payable lessee shall pay air-conditioning charges for air-conditioning carpet area of building at rate of 50 paise per sq. ft. on carpet area. 4. In accordance with this agreement, assessee constructed three- storeyed building installed with central air-conditioning plant of 46 tons capacity and provided 12 window type air-conditioners. building was known as 'Siemens House" and total carpet area covered by central air- conditioning plant and window type air-conditioners was 14,340 sq. ft. Thereafter, agreement between lessor and lessee was entered into on 5-9-1973. According to said agreement for first five years of lease, rent payable in respect of demised premises shall be Rs. 11,944 per month. For next five years of lease, rent payable shall be Rs. 13,369 per month. deed further provided that lease shall be deemed to have commenced from 16-4-1972, date on which lessee was put in possession of demised premise by lessors and lease shall be for term of 10 years from aforesaid date. According to lease deed lessee shall, however, be entitled to get lease extended for further term of five years after expiry of term of 10 years granted in terms of lease deed. agreement further provided that lessors shall regularly maintain and keep in repairs including all water pipes, sanitary fittings, drains, sewers and gutters, electrical equipment and fittings. lease deed made it clear that lessors will always be jointly and severally liable and responsible in all respects under several covenants and conditions agreed to by them. 5. On 6th September, another agreement was entered into between lessors and lessees. In this agreement reference was made to lease agreement dated 5-9-1973. Under this agreement, it was clearly provided that hire charges of air-conditioning plant will be 80 paise per sq. ft. per month and total monthly hire charges will be Rs. 11,472. Under this agreement, owners undertook to render, operate and maintain said central air- conditioning plant, fixtures and fittings during entire term of said lease deed dated 5-9-1973 or any extension thereafter. deed agreement also states that owners shall always be jointly and severally liable and responsible in all respect under several covenants and conditions agreed to by them in this agreement. On basis of such agreement assessee claimed in assessment years 1975-76 to 1977-78 that income from property and air- conditioning charges should be assessed as income from other sources. 6. ITO was not satisfied with said contention. According to him, air-conditioners were fixed to building and as such entire income should be assessed as income from 'house property'. learned AAC agreed with be assessed as income from 'house property'. learned AAC agreed with said finding. 7. Before Tribunal, contention of learned counsel for appellant was that finding of learned AAC is not correct. learned AAC mainly relied on decision of Tribunal given in assessment years 1973-74 and 1974-75. Tribunal while deciding case mainly relied on ratio of decision in case of Dr. P.A. Varghese v. CIT [1971] 80 ITR 180 (Ker.). facts of that case are distinguishable from facts of present case. In that case Hon'ble High Court on basis of decision of Tribunal held there was no letting of machinery, plant or furniture but only letting of building with certain amenities. On those facts, it was held that provisions of section 56(2)(iii) of Income-tax Act, 1961 ('the Act') were not attracted. Hon'ble High Court further held that income from letting out was chargeable as 'income from house property'. According to learned counsel if all agreements and material on record are appreciated it would be clear that letting out of building and hiring of air-conditioning plant could only come under section 56(2)(iii), because there was composite letting of building and air-conditioners and intention of partners was that two shall be enjoyed together. counsel further contended that from material on record it is not established that letting of building was separable from letting of air-conditioner; reliance was mainly placed on ratio of decisions in cases of Sultan Bros. (P.) Ltd. v. CIT [1964] 51 ITR 353 (SC), CIT v. Kanak Investments (P.) v. CIT [1974] 95 ITR 419 (Cal.), Chitpore Golabari Co. (P.) Ltd. v. CIT [1971] 82 ITR 753 (Cal.) CIT v. Taj Mahal Hotel [1971] 82 ITR 44 (SC) and Karnani Properties Ltd. v. CIT [1971] 82 ITR 547 (SC). 8. learned departmental representative contended that in these years income from building was assessed as income from property. That finding was accepted by assessee. building being centrally air-conditioned and air-conditioning plant being fixed with building, income from hiring of air-conditioning shall also be assessable as income from house property. departmental representative contended that there was only one composite letting of building and as such income should be assessed in both cases as income from house property. Reliance was mainly placed on ratio of decision in case of Dr. P.A. Varghese (supra). He further contended that in immediately preceding year Tribunal had already held that income from building and hire charges for providing on air-conditioning facility charges should be assessed as income from property and as such for this year also, it may be held accordingly. 9. We have considered rival submissions and perused entire material on record. Before discussing contentions of parties, we would like to refer to certain sections of Act. Section 4 of Act contains charging provision; and charge is on total income of previous year. Total income is defined as total amount of income referred to in section 5 of Act, computed in manner laid down in Act. Section 14 of Act classifies all income under several heads for purpose of computation of total income. That section reads as under: "Heads of income Save as otherwise provided by this Act, all income shall, for purposes of charge of income-tax and computation of total income, be classified under following heads of income: A. Salaries B. Interest on securities C. Income from house property D. Profits and gains of business of profession E. Capital gains F. Income from other sources." Section 22 of Act states what is income chargeable under head 'Income from house property'. Sections 24 and 25 of Act deal with deductions allowed in computing income chargeable under head 'Income from house property'. Section 26 of Act provides that where property consisting of buildings or buildings and lands appurtenant there to is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not in respect of such property be assessed as AOP, but share of each such person in income from property as computed in accordance with sections 22 to 25 of Act shall be included in his total income. term 'house property' is not defined in Act. Section 56 states what is income chargeable under head 'Income from other sources. It reads: "(1) Income of every kind which is not to be excluded from total income under this Act shall be chargeable to income-tax under head 'Income from other sources', if it is not chargeable to income-tax under any of heads specified in section 14, items to E. (2) In particular, and without prejudice to generality of provisions of sub-section (1), following income shall be chargeable to income-tax under head 'Income from other sources', namely: (i) dividends ** ** ** (ii) income from machinery, plant or furniture belonging to assessee and let on hire, if income is not chargeable to income-tax under head 'Profits and gains of business or profession'; (iii) where assessee lets on hire machinery, plant or furniture belonging to him and also buildings, and letting of buildings is inseparable form letting of said machinery, plant or furniture, income from such letting, if it is not chargeable to income-tax under head 'Profits and gains of business or profession'." It is clear from sub-section (1) of section 56 that income would be chargeable under head 'Income from other sources' only if it does not fall under any of other heads specified in section 14. So, if income falls under section 22, it cannot fall under section 56. Section 57 of Act specifies deductions allowed in computing income chargeable under head 'Income from other sources'; and according to that provision, most of deductions allowed in respect of buildings, plant, machinery and furniture used for purposes of business are allowed in case of income of nature referred to in clauses (ii) and (iii) of sub-section (2) of section 56. Clause (iii) of sub-section (2) of section 56 applies only to combination of two lettings, which are inseparable, letting of machinery, plant or furniture and also letting of buildings. It seeks of 'the letting of buildings' and also of 'letting of said machinery, plant or furniture'; and said provision is only attracted if above two things are inseparable, or, in other words, if they form part and parcel of same transaction. 10. similar issue came for decision before their Lordships of Supreme Court in case of Sultan Bros. (P.) Ltd. (supra). In that case assessee constructed building, fitted it up with furniture and fixtures for being run as hotel. He then let out building fully equipped and furnished for running hotel and after certain ancillary, lease provided for monthly rent or Rs. 5,950 for building and hire of Rs. 5,000 for furniture and fixtures. assessee claimed that whole income received under lease fell under sub-section (4) of section 12 of Indian Income-tax Act, 1922 and that it should be assessed as income under head 'Income from other sources'. income-tax authorities disallowed claim holding that rent received from building was assessable under head 'Income from house property' and that rent received on account of furniture and fixtures alone was assessable under head 'Income from other sources. Supreme Court accepted assessee's claim holding that when building, plant, machinery or furniture are inseparable Act contemplates rent from building as residuary head of income. Dealing with question whether it was such letting court held as under: "What, then, is inseparable letting? It was suggested on behalf of respondent Commissioner that sub-section contemplates case where machinery, plant or furniture are by their nature inseparable from building so that if machinery, plant or furniture are let, building has also necessarily to be let along with it. There are two objections to this argument. In first place, if this was intention, section might well have provided that where machinery, plant or furniture are inseparable form building and both are let, etc. language however is not that two must be inseparably connected etc. language however is not that two must be inseparably connected when let but that letting of one is to be inseparable from letting of other. next objection is that there can be no case in which one cannot be separated from other. In every case that we can conceive of, it may be possible to dismantle machinery or plant or fixtures from where it was implanted or fixed and set it up in new building. As regards furniture, of course, they simply rest on floor of building in which it lies and two indeed are always separable. We are unable, therefore, to accept contention that inseparable in sub-section means that plant, machinery or furniture are affixed to building. It seems to us that inseparability referred to in sub-section (4) is inseparability arising from intention of parties. That intention may be ascertained by framing following questions: Was it intention in making lease - and it matters not whether there is one lease or two, that is, separate leases in respect of furniture and building-that two should be enjoyed together? Was it intention to make letting of two practically one letting? Would one have been let alone and lease of it accepted without other? If answers to first two questions are in affirmative, and last in negative then, in our view, it has to be held that it was intended that lettings would be inseparable. This view also provides justification for taking case of income from lease of building out of section 9 and putting it under section 12 as residuary head of income. In then become new kind in income, not covered by section 9 that is income not from ownership of building alone but income which though arising from building would not have arisen if plant, machinery and furniture had not also been let along with it." (p. 363) 11. We may point out that it is not case of revenue that air- conditioning plant is not plant or machinery but for sake of clarity we may point out that air-conditioning plant does come within definition of word plant or machinery. In decision in case of Taj Mahal Hotel (supra), their Lordships interpreted meaning of word 'plant'. Their Lordships accepted that this word was interpreted in case of Yarmouth v. France [1887] 19 QB 647. According to that meaning 'plant' includes whatever apparatus or instruments are used by businessman in carrying on his business. Their Lordships of Supreme Court observed as under: "The heating installation job building may be passive in sense that it involves no moving machinery, but few would deny it name of 'plant'. same thing could, no doubt, be said of many air-conditioning and water softening installations." (p. 48) 12. In decision in case of Chitpore Golabari Co. (P.) Ltd. (supra), their Lordships of Calcutta High Court held that word 'plant' is word of wide import. word 'machinery', when used in ordinary language, prima facie means some mechanical contrivances which by themselves or in combination with one or more other mechanical contrivances by combined movement and inter-dependent operation of their respective parts, generate power or evoke, modify, apply or direct natural forces with object in each case of effecting definite and specific result. In said decision Court clearly held that air- conditioning plants, tubewells, and refrigerators would be 'plant or machinery' within meaning of terms in section 12. Having regard to definition of word 'plant and machinery' and decision on this, on facts of present case, it is held that air-conditioning plant is plant or machinery within meaning of section 56(2)(iii). 13. In view of aforesaid facts, it has to be seen whether letting in present case of building fixtures, air-conditioners were separable or inseparable. It is true that rent for building and hire charges for air-conditioning were separately referred in lease deed but that does not in our view make two lettings separable. In spite of sums payable for enjoyment of two things being fixed separately, dominating intention of partners was that two shall be enjoyed together. We may now refer to relevant clauses of agreement to see whether parties intended that fixtures, air- conditioning and building shall all be enjoyed together. Clause 1 of agreement dated 22-6-1970 clearly provides that lessors shall give on lease exclusively to leases and leases shall take on lease from lessors, said land being plot No. B-5, Jangpura, situated at Mathura Road, New Delhi, within city-land and registration sub-district of Delhi measuring 1500 sq. yds. and more particularly described in schedule here under written and delineated on plan hereto annexed and thereon surrounded by red coloured boundary line together with said building to be constructed thereon according to specifications and in manner and with amenities hereafter recited. According to clause 6 of said agreement, building shall be constructed by lessors for use of lessees and shall be constructed in accordance with building plants and designs submitted or approved by lessees from time to time and it shall be liability and responsibility of lessors to have said plans and designs approved and sanctioned by Delhi Municipal Corporation or other authorities and to do all such acts, deeds, matters and things in connection with same or in connection with constructions of said building or any part thereof at lessor's own cost. lessors hereby further expressly agree with lessees that construction work of said building and other structures thereon shall commence on 1-8- 1970 and same shall be completed within period of one year from that date. lessors shall complete construction of said entire building and other structures thereon together with central air-conditioning plant and all its amenities and facilities fit for use and occupation by lessees on or after August 1971. Clause 10 of agreement provides that lessors shall make said premises centrally air-conditioned entirely at their own cost and expenses. lessors shall provide initially in said premises their own window type air-conditioning units for cabins. It shall be liability and responsibility of lessors to regularly maintain and keep in good condition and repair central air-conditioning plant and window air-conditioners of said building and other structures and lessees shall in no way be liable or responsible in connection with same or any part thereof. Paragraph No. 17 of agreement states that in addition to rent payable by lessees to lessors in respect of carpet area of basement and each floor of said building as provided in agreement, lessees shall pay to lessors air- conditioning charges for air-conditioned carpet area. Clause 1 of lease deed dated 5-9-1973 clearly states that lessors do hereby demise unto lessees all that said plot of land, more particularly described in schedule thereto together with building and other structures standing thereon and all courtyards, compounds, lawns, fences, hedges, passages, pathways, drains, rights, liberties and easements appurtenant thereto in consideration of rent here under reserved. According to clause 2 of deed for first five years of lease rent payable in respect of premises was Rs. 11,944 per month. For next five years of lease, rent payable in respect of premises shall be Rs. 13,369. Paragraph No. 11 of lease deed clearly provides that lessors shall regularly maintain and keep in repairs premises including all water pipes, sanitary fittings, in upon under or about or loading from and to said building and observe and conform to all such rules of Municipal Corporation of Delhi. Clause 19 of deed clearly provides that lessors were jointly and severally liable and responsible in all respect under several covenants and conditions agreed to by them in this lease deed. agreement of hire dated 6-9-1973 clearly provides that owners have by lease agreement dated 5-9-1973 demised unto hirers land and building together with appurtenances, etc., at B-5, Jangpura, Mathura Road, New Delhi. It further provides as under: "And whereas owners have, at request of hirers provided, in their building bearing plot No. B-5, Jangpura, Mathura Road, New Delhi, one central air-conditioning plant having capacity of 43 tons together with other fixtures and fittings for, purpose of supplying cool and hot air in said building to hirer and have also provided 12 Nos. window type air-conditioners for purpose of supplying cool air in cabins and rooms in said building. And whereas owners have also agreed to maintain and keep in proper working condition said air-conditioning plant, fixtures and fittings and 12 Nos. window type air-conditioners and to replace any machinery or any part thereof which may need replacement or repairs." It further provides as under: "The owners hereby undertake to run, operate and maintain central air- conditioning plant of 46 tons capacity, fixtures and fittings so as to distribute as per requirement of hirer cool or hot air over area 11,508 sq. ft. and 12 Nos. windows type air-conditioners to distribute cool (not hot air) over area of 2832 sq. ft. in building known as Siemens House, at B-5, Jangpura, Mathura Road, New Delhi, during entire terms of said lease dated 5-9-1973, or any extension thereof." said agreement further states as under: "The owners have agreed with hirer that they will continue to supply cool/hot air through operation of central air-conditioning plant and machinery and accessories and fixtures and fittings to hirer as long as hirer continues to occupy said premises at B-5, Jangpura, Mathura Road, New Delhi." 14. According to paragraph No. 12 of agreement, owners shall always be jointly and severally liable and responsible in all respect under several covenants and conditions agreed to by them in this agreement. 15. If we consider aforesaid clauses of agreements dated 22-6- 1970, 5-9-1973 and 6-9-1973, which are part and parcel of same transaction, i t would be clear that it was intention of parties that fixtures and central air-conditioning plant and building should be enjoyed all together and not one separately from other. As regards renewal of lease of building, it requires lessor to provide at all times during continuance of lease and renewal thereof, furniture including air-conditioning plant mentioned in lease agreement. Thus, it is also clear that it was incumbent on lessors to supply and maintain air-conditioning facilities during renewed term of lease of building. agreement further provides that major repairs to or replacement of furniture or air-conditioning plant shall be made by lessors. Such repairs or replacement may of course be necessitated in case where furniture or air-conditioning plant were damaged. 16. Looking to aforesaid facts and ratio of decisions of cases referred to above, we are of view that in present case, letting of building and air-conditioning plant were inseparable. It was intended by parties that enjoyment of building and air-conditioning plant shall be all together and parties also intended that letting of building and air- conditioning plant would be inseparable. Under circumstances, income from building and air-conditioning plant was clearly assessable under provisions of section 56(2)(iii). 17. contention of revenue that assessee has accepted finding of learned AAC that income from building should be assessable under section 22/26 as such income from air-conditioning plant should also be assessable under said provision, can hardly be accepted. Whether income from building is assessable under section 22/26 or under section 56(2)(iii) is not before us for decision. Under circumstances, any finding given by income-tax authorities on that point will not come in our way in deciding controversy in respect of income arising from air-conditioning plant. 18. other contention of revenue that since Tribunal in assessment years 1973-74 and 1974-75 has already held that income from building and air-conditioning plant should be assessed under head 'income from house property' and as such same finding may be given in these years is also not acceptable to us. After considering all facts and relevant decision on subject, we are of view that we are unable to agree with view of Tribunal taken by it in assessment years 1973-74 and 1974-75. 19. decisions relied on by counsel for assessee are on lines of decision in case of Sultan Bros. (P.) Ltd. (supra). So all these decisions support contentions of assessee. 20. decision relied on by revenue in Dr. P.A. Varghese's case (supra) is not applicable on facts of present case. In that case question was whether income obtained by assessee as rent from Export Promotion Council for letting out to it portion of building constructed by him was chargeable as income from house property or as income from other sources under section 56(2)(iii). Hon'ble High Court took view that it would be income from house property. agreement entered into between lessor and lessee in that case does not make out letting of any machinery, plant or furniture. rent was fixed for building with all amenities mentioned in agreement. It must have been fixed having due regard to provisions of these amenities. There was only one letting in that case and that was of building. On those facts, it was held that income from building as assessable under section 22. 21. In present case, main controversy is whether income from air-conditioning plant is assessable under section 22 or under section 56(2)(iii). We have already held, as discussed above, that income received from air- conditioning facility is clearly assessable under section 56(2)(iii). For sake of argument, if it is held that there was no lease of air-conditioning plant, in that case also income from air-conditioning facility have to be assessed as income form other sources. In support of this proposition, we are fortified by decision in case of D.C. Shah v. CIT [1979] 118 ITR 419 (Kar.) In that case formal lease deed was executed between state Bank and co-owner of building. bank took possession in 1967. Although there was reference to provision of air conditioning facility in letters exchanged between bank and agents of co-owners before lease deed was executed, in lease deed itself there was no mention of obligation on part of co-owners to provide air-conditioning facilities and any rent payable in that regard buy assessee. By august 1976, air-conditioning facility was provided. lessees paid for air-conditioning facility at rate of 20 paise per sq. ft. and labour rate was raised to 50 paise for sq. ft. lessees paid charges of electricity and water consumed for purpose of providing air-conditioning facility. air-conditioning facility had to be maintained by co-owner. Rejecting claim of assesses that rent from building should be assessed as income from property under section 26 and that income realised from air-conditioning facility should be assessed as income from other sources under section 56, ITO held that entire income should be assessed as income from other sources under section 56(2)(iii). Tribunal also took same view. On reference, court held that in there instant case even though there was some reference to provision of air-conditioning facility in correspondence which preceded lease deed, there was no reference to it in lease deed. leases was not maintaining air-conditioning plant. They were only paying for provision of air-conditioning facility on basis of floor area for which amenity was provided. air-conditioning plant was under control of co-owner of building. According to understanding between parties, lessee had to pay some additional change for provision of air-conditioning facility depending on floor area for which that facility was provided. This also showed that there was no lease of air- conditioning plant along with building in favour of lease. since there was on lease of air-conditioning plant, section 56(2)(iii) was not applicable. rent realised in respect of lease of building was assessable in accordance with section 26 and income realised or account of provision of air-conditioning facility was assessable as income from other sources. 22. Looking to aforesaid facts, evidence on record coupled with circumstances of case, we are of view that letting of building in question and hiring of air-conditioning plant were in separable and it was intended by parties that their enhancement shall be all together. So income therefrom had to be assessed as income from other sources falling under section 56(2)(iii). 23. In result, all three appeals are allowed. *** SHASHI KANT GUPTA v. INCOME TAX OFFICER