TMI Blog1994 (3) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... in making addition of Rs. 15,76,019 being difference between the amount charged to 100% subsidiary company and the cost price as Income from business. 4. The assessee is an Investment Company. It holds large investments in shares of companies and it is held to be a dealer in shares and the profit and/or loss therefrom is treated as income from business. It is also having investment in immovable properties. The rent income received from the immovable properties has been shown and assessed under the head "Property income" for all the years ever since the inception of the company. 5. During the year under appeal, the assessee-company sold one of the immovable properties situated at Maker Chambers, Nariman Point, Bombay to its 100% subsidia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar that the income from letting out of the property was shown separately as Rent Income and has not been shown as business income. The learned counsel for the assessee further submits that it was shown to the CIT(A) from the copies of assessment orders for various years that the Income-tax Department had taxed the Rental Income as income from property under section 22 and also depreciation on the same was not granted. Even the Appellate Authorities had held that no depreciation was available as the income was from letting out of the property. The learned counsel took us through the past assessment orders - assessment orders as well as the appellate orders where income from the property was assessed under the head "Property income" and not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... single transaction like the one entered into by the assessee with its subsidiary company cannot make it an adventure in the nature of trade. In support of this contention the learned counsel relied upon the following decisions: (1) Janki Ram Bahadur Ram v. CIT [1965] 57 ITR 21 (SC) (2) CIT v. P.K.N. Co. Ltd. [1966] 60 ITR 65 (SC) (3) CIT v. Anandlal Becharlal Co. [1977] 107 ITR 677 (Bom.) (4) Ch. Achaiah v. CIT [1985] 156 ITR 78 (AP) The learned counsel for the assessee further submits that both the learned ITO and the learned CIT(A) have erred in holding that the ratio laid down by the Supreme Court in the case of McDowell Co. Ltd. applied to the facts of the present case. He submits that there was no intention of the part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders relating to the preceding years, we are of the considered opinion that the authorities below have erred in holding that the property under transfer was not a capital asset in the hands of the assessee-company and was a stock-in-trade. Ever since the inception of the company this is a case of solitary transaction of sale/transfer of property and at no stage the property was purchased with the intention of keeping it as a stock-in-trade. In fact the assessee-company has held its properties as capital assets and the income accruing thereon has been declared and assessed as income from property under section 22 of the Act and not as income from business. No depreciation has ever been allowed on the properties. Again the interest amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s below on the decision in the case of McDowell Co. Ltd. after taking into consideration the facts and circumstances of the case, we are of the considered opinion that the ratio laid down by the Supreme Court in that case does not apply to the facts of the present case. In the case of McDowell Co. Ltd. the facts related to liability of sales tax which according to the statute (Andhra Pradesh Sales Tax Act) was payable by the manufacturer and it also included the Excise Duty. That was a case of colourable device to reduce the sales tax liability by excluding the Excise Duty from the turn-over of the manufacturer and the Apex Court held that the tax planning may be legitimate provided it is within the framework of law. In the case before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the claim of Rs. 45,957 claim of interest payment. The appellant submits that what should be considered is total investment. Under the circumstances the claim of interest is admissible. It may be granted now." At the time of hearing it was not pressed and the same is accordingly dismissed. 12. Ground No. 3 reads as under: "The learned Assessing Officer has erred in considering the income from property under the head business and not under the head property as in all the years. It is submitted that it may be so done now." This ground is consequential in nature. Since we have held in ground No. 1 that income from property was not business income, the ITO is directed to treat the income from property as income assessable under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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