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TMI Blog1996 (12) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... are several assets which are used by the assessee but are not entitled for depreciation. The learned departmental representative strongly supported the disallowance of depreciation. 3. We have carefully considered the rival submissions. The word ' furniture ' is not defined in the Act and therefore it is proper to refer to the dictionary meaning. Webster's New International Dictionary defines furniture to mean ' articles of convenience or decoration used to furnish a house, apartment, place of business or of accommodation '. According to the Shorter Oxford English Dictionary, the word ' furniture ' inter alia means ' movable articles in a dwelling house, place of business, or a public building '. From the above it is clear, so far as dictionary meaning is concerned, that all articles of convenience or decoration used for the purpose of furnishing a place of business or an office are articles of furniture. There is no dispute that these paintings were used as decorations in the office and the office was used for the purpose of business. We, therefore, are of the opinion that these paintings constitute interior decoration to give a good look to the place of business. We, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d was shown as short-term capital gains/short-term capital loss. It was found by the assessee that prior to 1-4-1991 it held shares of three companies within the group under investment portfolio. During the year it had traded in shares of 30 companies and such transactions in shares, according to the Assessing Officer, constituted the business of trading in shares. The Assessing Officer has assessed the profit on sale of shares as business income. The CIT(Appeals) upheld the order of the Assessing Officer in the following manner : " 9. The next dispute is with regard to treatment of a sum of Rs. 53,88,763 realised by the assessee on sale shares as business income of the company. The appellant had claimed it as income under the head ' Capital Gains ' and claimed the above-referred capital loss as set off against this income. The assessing authority held that after the sale of the tea estate, the company was doing business in real estate and purchase and sale of shares. The profit of Rs. 53,88,763 derived from the purchase and sale of shares was therefore treated by him as business income. In my opinion the Deputy Commissioner was perfectly justified in treating the amount involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the shares of 40,000 of Reliance were sold by the assessee on 26-2-1992 whereas they were actually purchased on 3-3-1992. The same is the position with regard to 7000 shares of Reliance sold on 13-2-1992 whereas the same were purchased on 18-2-1992. It cannot be accepted that the assessee purchased the shares with a view to keep them as investment and earned some income therefrom. The intention of the assessee from the perusal of these details clearly shows that it was to make gain by dealing in them. Applying the principle laid down by the Supreme Court in the case of Raja Bahadur Kamakhya Narain Singh v. CIT [1970] 77 ITR 253 (SC), we are of the opinion that the present transaction in shares have resulted in the business profits assessable as such in the hands of the assessee. We, therefore, decline to interfere. 11. The next dispute relates to the exclusion of the value of two flats bought by the company for the purpose of granting depreciation on the block of building. The department has taken steps on the reasoning that there is no evidence to indicate that the asset has been put to use for any business purpose during the year. The learned counsel for the assessee has submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than what has been disclosed. Placing reliance on the decision of the Supreme Court in the case of K. P. Varghese v. ITO [1981] 131 ITR 597/7 Taxman 13, the CIT (Appeals) held that the disallowance of short-term capital loss was not justified and he held that such loss is available for adjustment or set off against other income of the assessee. The revenue disputes these findings of the CIT (Appeals) for the same reasons as are mentioned in the assessment order. 14. A ground was taken by the revenue pleading the invocation of Explanation to section 73 and the same was withdrawn. The departmental representative argued that the entire transaction in shares is a package deal involving the transfer of 557 acres of tea estate, in favour of R. Anandakumar. The learned departmental representative strongly relied upon the discussions in the assessment order and argued that there was no basis for fixing Rs. 56 lakhs as the value of 9,99,999 shares of STF Ltd. The steep fall of Rs. 46 lakhs in the value of the shares in less than one year is inexplicable. Such a deliberate low-pricing of the shares a part of tax-driven scheme and a device patently colourable. The assessee has arranged its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther 101 shares of Rs. 10 each was allotted to Burnside and 6 shares of Rs. 10 each were allotted to the nominees of Burnside on actual payment. Consequently, as on 25-3-1991 the assessee was holding 999,984 shares of Rs. 10 each in its own name and 6 shares of Rs. 10 each were held in the names of their nominees. By an agreement of sale dated 15-3-1991, the assessee transferred to S.T.F. Ltd. 3.37 acres of agricultural land together with factory, buildings and machinery in the factory for a total consideration of Rs. 50 lakhs. S.T.F. Ltd. paid an advance of Rs. 10,000 for this transaction. Thus by the two agreements the assessee sold the entire tea estate to its subsidiary (STF Ltd.) for a consideration of Rs. 6.58 crores. However, as already mentioned, the assessee retained the lien over the estate as the consideration was not fully received. 17. An agreement constituting the Memorandum of Understanding was entered into on 25-3-1991 between the assessee and Sri R. Anandakumar, son of M. Rengaswamy wherein it was agreed to transfer the tea factory, bungalow and buildings together with the tea estate for a total consideration of Rs. 6.25 crores. The consideration of Rs. 6.25 cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer shall treat the sum of Rs. 5,01,519 as a deficit in the realisation in respect of shares of S.T.F. Ltd. The balance loss shall be regarded as a loss in the sale of tea estate. 19. The next dispute in the revenue's appeal relates to the assessment of Rs. 8,95,000 as long-term capital gains. The assessee had sold 3.3 acres of land with factory buildings, manager's bungalow etc. by a sale deed dated 3-6-1991 for a consideration of Rs. 30 lakhs. According to the Assessing Officer, the buildings involved in the transaction were depreciable assets and on the basis of their written down value and sale value, a sum of Rs. 9,66,628 was brought to tax as short-term capital gains as per section 50 of the Income-tax Act. The assessee had no dispute with regard to this. However, out of the land sold a portion of 1.7 acres was treated by the Assessing Officer as non-agricultural and worked out the long-term capital gains of Rs. 8.95 lakhs. According to the assessee, these were situated in a Panchayat and do not come within the definition of ' capital assets ' under section 2(14) of the income-tax Act. The CIT(A) accepted the assessee's stand and the revenue is aggrieved. 20. According t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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