Section 56(2)(iii)

Section 56(2)(iii) — the law in short

What the courts have decided on section 56(2)(iii), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Sultan Brothers P Ltd v CIT Supreme CourtHelps taxpayer
  I let a building together with its furniture and fittings under one agreement. Is that rent house property income?
  It depends, and the Supreme Court refused to lay down a formula. Whether a particular letting is a business is decided on the circumstances of each case, and whether the building and the plant, machinery or furniture are inseparably let turns on the intention of the parties - whether the two were meant to be enjoyed together and whether one would have been let without the other.
• Jay Metal Industries Pvt. Ltd. v CIT High CourtCuts both ways
  I let a fully furnished, centrally air-conditioned office with a generator on a single lease and claimed the thirty per cent standard deduction under s.24(a). The Assessing Officer has taxed the whole rent as income from other sources. Can I still get some deduction?
  The Delhi High Court held that the lease was composite, that the rent answered the description in s.56(2)(iii), and that the standard deduction under s.24(a) was therefore not available. But it did not leave the assessee with nothing: it directed that while giving appeal effect the Assessing Officer grant the benefit of s.57 — recorded in the judgment as s.57(iii) — in respect of the deduction corresponding to the letting, the Revenue not having disputed that the assessee had never claimed depreciation.
• Striton Properties Private Limited v DCIT ITATCuts both waysNo later treatment found
  I have claimed depreciation on plant and machinery used at a club house and garden. The Assessing Officer says I showed no income from letting them out and is not the owner of the facilities. Can I still claim depreciation under s.57?
  No. The Mumbai Bench held that s.57(ii) has to be read with s.56(2)(ii) and (iii), and that on a conjoint reading the income must actually be chargeable under the head income from other sources before depreciation can be claimed against it. Since no income had been shown, the mandatory condition was not fulfilled and the disallowance was upheld.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.