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TMI Blog2005 (6) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) has also erred in directing the Assessing Officer not to charge interest under sections 234B and 234C of the IT Act which was duly charged by the Assessing Officer in computation of income which is part of the assessment order." 2.2 Ground No. 2 for assessment year 1998-99 reads as under:- "The CIT(A) has further erred in deleting the addition of Rs. 16,54,000 which was made by the Assessing Officer on account of brokerage." 3. Brief facts with regard to common effective ground No. 1 in all the appeals are that the assessee, engaged in the business of hotel and running a cinema hall, filed return on 30-11-1995 declaring a total income of Rs. 10,14,026, which included loss under the head 'Income from house property' amounting to Rs. 6,91,234 and capital gains amounting to Rs. 25,26,443. During assessment proceedings under section 143(3) of the Income-tax Act, the Assessing Officer found that in the assessment years under appeal the assessee had shown sale of certain Shop-cum-Offices (for short SCOs) which it had acquired on 17-11-1995 from M/s. Swastik Construction, which was owned by its Managing Director and advance of Rs. 9 lakhs was paid. When asked to furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein it has been stated that the SCOs were acquired for expansion of the existing business. Ld. AR then relied on the decisions of the cases of CIT v. Nathalal Dahyabhai [1980] 126 ITR 555 (Guj.); CIT v. Karam Chand Thapar & Sons Ltd. [1978] 115 ITR 250 (Cal); Kaur Singh v. CIT [1983] 144 ITR 756 (Punj. & Har.) and G. Venkataswami Naidu & Co. v. CIT [1959] 35 ITR 594 (SC). Ld. AR submitted that the case of G. Venkataswami Naidu & Co. relied upon by the Assessing Officer is in favour of the assessee. Ld. AR further submitted that the assessee has sold the same property in 1994-95 also, where the Assessing Officer has accepted its plea and treated the transaction as years under appeal the Assessing Officer has treated the income arising from sale of SCOs as business income. 6. We have heard both the parties, perused the orders of tax authorities and gone through the material available on record as well as the case law cited by the assessee. We find that the crux of the issue to be decided by us is whether sale of SCOs and profit arising therefrom is to be computed under the head 'profits and gains of business and profession' or 'capital gain' and whether the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n isolated transaction can satisfy the description of an adventure in the nature of trade, provided at least some of the essential features of trade are present in the isolated or single transaction. 6.4 It will be useful to go through the cases relied upon by the CIT(A) in the impugned order. In the case of H. Holck Larsen, the assessee undertook purchase and sale of shares and the transaction was held to be capital in nature. It was held that in order to determine whether one was a dealer in shares or an investor, the totality of all the facts will have to be borne in mind. If the transaction of purchase and sale was a business pursuit, profit would be definitely considered as business income. However, where the intention of the assessee at the time of acquisition of the property was not to resell the same immediately for profits but to earn profit therefrom, the assessee would be considered as an investor and the profit arising from the sale of property became his income from long-term capital gain and was assessable at a lower rate of tax. Such an intention was only one of the factors in deciding whether a particular asset was stock-in-trade or investment. 6.5 In the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction a nursing home but subsequently after waiting for a period of three years and carrying out the construction for a period of three to four years, the assessee proceeded to dispose of a major part of the property in the assessment year 1991-92, that after making the purchase in June 1980, it took the assessee a good period of 19-20 years to dispose of the property and in case it was to be a business proposition then no prudent person would have waited for such a long period to dispose of the property, that the surplus resulting from the sale had to be treated as capital gains and not as one arising from an 'adventure in the nature of trade'. On further appeal, the High Court held that the character of a transaction cannot be determined solely on the application of an abstract rule, principle or test but must depend upon all the facts and circumstances of the case. If the transaction is in the ordinary line of the assessee's business, there would hardly be any difficulty in concluding that it was a trading transaction. But where it is not, the facts must be properly assessed to discover whether it was in the nature of trade. Substance of this decision further stren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under the head 'capital gain' after necessary indexation. We uphold her order and do not find any merit in the common ground raised by the revenue in all the three appeals. The ground stands rejected. 7. Coming to ground No. 2 for assessment year 1995-96, challenging the order of the CIT(A) to not charging of interest under section 234B/234C. We find that relying on the decision in the case of CIT v. Ranchi Club Ltd. [2001] 247 ITR 209 (SC), she directed the Assessing Officer to delete the interest charged under section 234B/234C, in the absence of mention of charging of interest in the assessment order. We find that there is no mention of charging of interest in the assessment order but we also do not have before us ITNS-150, which is part of the assessment order as claimed by the revenue in ground of appeal. Therefore, we direct the CIT(A) to go through the record and find if there is any mention of charging of interest under section 234B/234C in ITNS-150 and act accordingly to give effect to the principle of law. 8. Coming to ground No. 2 for assessment year 1998-99, the brief facts are that during assessment proceedings, the Assessing Officer observed that while com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be expected to let from year to year; or (b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable." From plain reading of the above, we do not find any express provision regarding allowance of any expenditure, brokerage, commission or by any one name, for determining ALV of the property. Rental income from property is assessed under the head 'Income from house property'. It will be pertinent to mention here that computation of income from different sources is done and taxed under five heads, i.e., (i) income from salary; (ii) income business; (iii) capital gains; (iv) income from house property; and (v) income from any other source. There are express provisions in each head for computation of income. Under the business head, actual expenditure is allowed as cash or mercantile basis, as per sections 28 to 43, while under the head 'salary' only standard deduction is allowed. Likewise, under 'house property', only standard deduction is sought to be allowed under section 24. Under the head 'In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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