TMI Blog2008 (1) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Court was delivered by K. RAVIRAJA PANDIAN ,J.- 1. The appeal is filed by formulating the following questions of law : "1. Whether the Appellate Tribunal is correct in law in holding that the income derived by the Appellant from leasing of the 'commercial property' is not business income and has to be assessed as income from property? 2. Whether on the facts and in the circumstances of the case, the Tribunal, having found that the transaction is a business activity was justified in concluding that the income has to be assessed as "income from property?" 3. Whether the Tribunal is correct in law in sustaining the stand of the Respondent on the assessment of lease income under head 'property' even though it was not a ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the head of income from house property after verifying the lease deeds entered into by the assessees with the lessees. As regards the computation of long term capital gains, the assessing officer had re-worked the taxable capital gains at Rs.12,03,90,674/- as against the admitted amount of Rs.9,88,63,664/- by adopting the fair market value of the land as on 1.4.1981. 3. Aggrieved by that order, the assessee carried the matter on appeal to the Commissioner of Income-tax (Appeals), Chennai, who in respect of the the first issue confirmed the order of the assessing officer but in respect of the second issue granted partial relief. The second appeal filed before the Tribunal also has not yielded any result in favour of the appellant/as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entary agreement of lease executed on 25.7.2000 which was operative from 15.7.2000. The lease agreement executed on 25.7.2000 clearly specified that the rent payable for the premises let out to Shoppers Stop was Rs.3,58,020/- and Rs.2,79,059 per month for ground and first floors respectively. The conditions for chargeability of property income as provided under the provisions of Section 22 of the Income-tax Act were all available in this case i.e., the assessee was the owner of the property and has not been used by him for the purpose of his business. Thus the income was chargeable as income from property and not as business income. 8. On appeal, the Commissioner after hearing the argument and perusal of the material on record, has re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee company would not alter the nature of activity of the assessee company. The income earned cannot be under the head of "business income". The agreement did not even suggest that the letting out of the property by the assessee is in the nature of business activity. 11. A constitution Bench of the Supreme Court in the case of Sultan Brothers P. Ltd.v.CIT {1964] 51 ITR 353, while approving the decision rendered by three-Judges Bench in the case of East India Housing and Land Development Trust Ltd. v. CIT [1961]42 ITR 49 (SC) has held that though the object of the assessee company no doubt was to acquire land and building and turn the same into account by construction, reconstruction and leasing and selling the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiality. The Commissioner (Appeals) after considering that the property taken up for comparison by the assessing officer had certain disadvantages, found that the property under consideration was almost at the cross road of Chetpet over bridge and was in the prime commercial locality. The commercial potentiality of the property has also been taken note of by the Commissioner (Appeals) and having given due regard to all the factors, the fair market value of the property of the appellant was fixed at Rs.3,40,000/- per ground. Thus, the value of the property has been determined on the basis of the evidence adduced i.e., the documents produced by the assessee pertaining to the year 1982 and this amount has been fixed after taking stock of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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