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TMI Blog2016 (1) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... to hold the income from transfer of the property is capital gains exigible to tax. The Revenue has not been able to controvert any of these contentions of the assessee or the finding of the CIT(A) with any evidence to the contrary. In view of the same, we do not see any reason to interfere with the order of the CIT(A). - Decided against revenue - ITA No. 1409/Hyd/2014 - - - Dated:- 27-11-2015 - P Madhavi Devi, JM And B Ramakotaiah, AM For the Appellant : Shri Smt Nivedita Biswas, CIT ( DR ) For the Respondent : Shri Hari Agarwal ORDER Per Smt. P. Madhavi Devi, JM This is Revenue s appeal for A.Y 2007-08. The only grievance of the Revenue in this appeal is that the CIT (A) has erroneously allowed the assessee s claim that the income from the sale of the building is capital gains and not income from business as held by the A.O. 2. Brief facts of the case are that the assessee, a partnership firm engaged in the business of building and developing properties, filed its return of income for A.Y 2007-08 on 31.08.2007 by declaring total income of ₹ 72,52,160. Subsequently, assessee filed revised return of income admitting a total income of ₹ 94,01,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has been the rental income and interest income. It was also reiterated that the assessee has been offering the rental income as income from house property and the same was being accepted by the Department for all the A.Ys and therefore, income from sale of such property was also assessable as capital gains only. AO was, however, not satisfied with the assessee s contentions and observed that the assessee is a partnership firm having seven partners and the partnership firm was constituted on 6.11.1995 and the Managing Partner of the assessee firm had entered into an agreement of development on 15.11.1993 with the land owners for developing commercial cum residential complex on a land admeasuring 963 sq.yards at Jambagh, Hyderabad and further that the partnership deed reveals that Sri Rajkumar Jain had invested funds for the purpose of raising the commercial complex and thereafter transferred the property to the firm w.e.f. 1.4.1995. It was further observed that the business of the assessee firm was to carry on development and construction of properties and it was not to hold any asset as investment. Therefore, the AO was of the opinion that the building was a business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further submitted that there was a survey action in the case of the assessee in the year 1998 wherein after thorough verification, the AO has accepted the income from the above property as income from house property and a consistent view has been adopted by the Department eversince, in accepting the rental income as income from house property. He further drew our attention to the assessment order for the A.Y. 2007-08 wherein the AO has accepted the rental income offered by the assessee as 'Income from House Property but has treated the gain on sale as 'business income . This, according to him, is a contradictory stand taken by the Department. He also drew our attention to the balance sheet of the assessee company for the relevant A.Y wherein the building has been shown as an investment and has also drawn our particular attention to the fact that the assessee has never treated the said asset as a business asset. Therefore, according to him, the CIT (A) has rightly treated the asset as a capital asset and treated the income from sale of the same as capital gain. 5. Having regard to the rival contentions and the material on record, we find that the land owners had ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property. A person, owning a business asset may not be able to realise the consideration for such business asset by sale or otherwise immediately on completion of the construction and therefore, may let it out in the lean period. The income earned during such period when the business asset is let out, whether is to be treated as 'Income from House Property or 'Business Income had come up for consideration before the Hon'ble Supreme Court in the case of Chennai Properties and Investments Ltd. vs. CIT in Civil Appeal No.4494 of 2004 dt. 09.04.2015 and the Hon ble Apex Court had noticed that the main object of the assessee company therein was to acquire and hold the properties and to let out them. Considering the object of the assessee therein, the Hon'ble Supreme Court has held that the rental income earned by the assessee was assessable under the head Income from business as in that case the busienss of the assessee was to acquire the properties in the city of Madras/Chennai and to let out those properties. Applying the above decision of the Hon ble Supreme Court to the facts of the case before us, we find that the business of the assessee is to continue to devel ..... 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