TMI Blog1997 (6) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities below rejecting the contention of the assessee that the rental income should be assessed under the head 'Profits and gains of business or profession' and instead assessing the same under the head 'Income from house property'. The facts of the case as emerging from the impugned order of the learned CIT(Appeals) are that during the year the assessee purchased premises No. 14, Alipore Park Road, Calcutta for a sum of Rs. 28,97,539. The assessee derived a small rent of Rs. 23,400 from these premises. It was contended by the assessee that this property had been purchased for further development by way of adventure in the nature of trade. The assessee could not have made investment of Rs. 28.97 lakhs merely for the rental income as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minutes of the Board of the Directors' meeting on 30th August 1985 as per pages 7 to 9 of the Paper Book filed by the assessee and thereafter, on 2-12-1985 as per pages 10 and 11 of the Paper Book. These minutes recorded that there were certain Court cases pending which were required to be pursued with a view to obtain absolute vacant possession of the property. In the minutes of the meeting of 2nd December 1985, it was decided to enter into negotiations for appointment of one Shri D.C. Ghose as Architect for the development of this property. 4. We have carefully considered the contentions of the learned counsel of the assessee. On the facts and in the circumstances of the case, it appears to us that there is little doubt that the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arry on business and the minutes of the meeting of the Board of Directors indicated that during the year various steps were contemplated and devised towards the task of development of the property and carrying on of business in relation thereto. In this context, the learned counsel placed heavy reliance on the Supreme Court decision in the case of CIT v. Sarabhai Management Corpn. Ltd. [1991] 192 ITR 151. The learned counsel also argued that it cannot be said that during this year there was no income chargeable to tax inasmuch as, the assessee derived gross rental income of Rs. 23,400 which on the facts and in the circumstances of the case should be assessed as business income of the assessee. 5. The facts of this case are within the narr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c., for the purpose of converting the residential house to a business and storage accommodation. As at the close of the previous year in that case, the assessee was in a position to offer services to licensees. After consideration of the matter, the Hon'ble Supreme Court observed as under : " The assessee had purchased a property; it was on the look out for persons to whom it could be let out; it had been able to get a customer; and it had carried out repairs, rewiring, installation of lift and other steps in the process of getting the premises converted from a residential house into a business and storage accommodation conforming to the requirements of the customer. Even if, as submitted by Dr. Gauri Shankar, the first category of activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es below have rightly considered the rental income as well as interest paid by the assessee on amounts borrowed under the head 'Income from house property'. 6. Ground of Appeal Nos. 4, 5 and 6 have been taken by the assessee as alternative to grounds of Appeal Nos. 1 to 3 which we have just discussed. As the first three grounds have been decided against the assessee, it is necessary to consider the alternative submissions. In ground of Appeal No. 4, the assessee has objected to the business loss of the assessee amounting to Rs. 93,580 being set off against dividend income of Rs. 1,64,800 and thus to that extent leaving the loss under the head 'Income from house property' unadjusted. According to the assessee, the dividend income of Rs. 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the computation under any head of income, other than 'Capital gains', is a loss and the assessee has no income under the head 'Capital gains', he shall subject to the provisions of this Chapter, be entitled to have the amount of such loss set off against his income, if any, assessable for that assessment year under any other head." On a plain reading of the provisions of section 71(1) it is seen that there is no order of precedence prescribed in this behalf. However, the expression "be entitled to" is suggestive that the choice in this respect should rest with the assessee. Furthermore, the Hon'ble Calcutta High Court have in the case of Punjab Produce Trading Co. Ltd. v. CIT [1986] 159 ITR 376/25 Taxman 110 in the contest of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
