TMI Blog2001 (7) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Tribunal is justified in law in directing to treat the rental income from the property at 7, Pretoria Street, Calcutta, assessable under the head 'Income from house property' and not under the 'Income from business' taken by the Assessing Officer? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in directing to assess the consideration received by the assessee against the sale of first floor together with the proportionate interest in law (land?) under the head 'Capital gain' and to compute the C. G. in relation to the gain arising from the sale of the first floor of the building at 7, Pretoria Street, Calcutta, as short-term capital gain?" The assessee is an individual. In the retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso did not accept the claim of the assessee that the consideration received in respect of the sale of the first floor together with the proportionate interest in the land should be computed under the head "Capital gain". It was observed that as the aforesaid income received by the assessee in the course of business activities, the same should be assessed under the head "Income from business". In appeal before the Commssioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) has taken the view that the rental income received by the assessee should be assessed under the head "Income from house property" and for the sale proceeds of the first floor of the premises at 7, Pretoria Street, Calcutta, he directed that the sale p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that under the lease deed there is a provision that the assessee as a lessee can demolish the present structure on that leasehold land and without consent of the lessor he can raise the construction. He can sell, assign or mortgage any rights in the structure he raised. Therefore, for the purpose of income-tax during the lease period he is not only as good as the owner but he is the deemed owner. In support of that he placed reliance on the decision of this court in the case of CIT v. Supreme Credit Corporation Ltd. [1998] 230 ITR 700 and the decision of this court in S. G. Mercantile Corporation P. Ltd. v. CIT [1972] 83 ITR 700 (SC); CIT v. Mumbadevi Mansion Co-owners Housing Co-operative P. Ltd. [19831 143 ITR 150 (Bom) and D. R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is the first year and in subsequent years even the Department has itself assessed the rental income as income from the house property. In 1991-92 the Assessing Officer has assessed the rental income as income from other sources. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) has directed that the rental income should be assessed as income from "house property". In 1992-93, again the Assessing Officer has assessed the rental income as income from house property. In all subsequent years, the assessee has disclosed the rental income as income from house property and that has been accepted and an intimation has been communicated under section 143(1)(a) of the Act. Before we go into the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... term capital gain. The Rajasthan High Court has held that the land is a capital asset in terms of section 2(14) of the Act and it is treated as a separate asset. Even for the purpose of section 32, a building which is entitled for depreciation would be the superstructure and would not include the site under section 48 of the Act. Therefore, the income chargeable under the head "Capital gains" had to be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset in the manner provided in the section. If the price of two capital assets has been charged at one consolidated price, then the assessee is entitled to bifurcate the same. A situation may arise where a gain fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rected to assess the rental income as income from house property. Not only that, Mr. Poddar has brought to our notice that in all the subsequent years, i.e, from the assessment year 1990-91, the income has been shown as income from house property and that has been taxed as such. Therefore, in these circumstances, there is no scope to interfere with the order of the Tribunal. The next issue whether the sale proceeds of the first floor together with the proportionate interest in the land should be taxed under the head "Capital gain" or whether the land and building can be taxed as two different assets the sale proceeds on account of the land can be taxed as long-term capital gains and the sale proceeds of structure can be taxed as short ..... X X X X Extracts X X X X X X X X Extracts X X X X
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