9911796707
TMI Blog2024 (9) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... iation. The presumption of the AO that no prudent person would wait for more than 10-20 years even after payment of twice the cost of the building cannot be countenanced. If the building has not been conveyed to the purchaser and remains with the developer then there is nothing wrong in the developer leasing out the premises. There is no sale noticed, in the very many years, by the AO who also states that the Company had furnished the name of 25 persons who had entered into agreements for sale who were all related parties of the assessee. It is also presumed that the transactions appear to be a prima facie business connivance (sic) and that retention of huge advance money without any legal claims from the prospective customers cannot be countenanced. We cannot understand how the absence of legal proceedings by the intending purchasers can impact the tax levy of the assessee. The fact remains that the Assessing Officer has clearly found that but for the lease of properties the assessee is not engaged in any other business. This is the precise facts on which Rayala Corporation and Chennai Properties [ 2016 (8) TMI 522 - SUPREME COURT] have been decided. The First Appellate Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 500 SC and Chennai Properties Investments Ltd. v. CIT reported in ( 2015) 373 ITR 673 SC and the judgment of a Division Bench of this Court in M.A. No. 567/2007 dated 18.11.2016, Pandooi Palace v. CIT, Patna . The Assessing Officer has erroneously relied on the decision of the Hon ble Supreme Court in Shambhu Investment Pvt. Ltd. v. Commissioner of Income Tax reported in ( 2003) 263 ITR 143 (SC) . Insofar as consistency required to be maintained by the Department, reliance was placed on a Division Bench of this Court in Dr. Narendra Prasad Others v. CIT Another , (2010) 322 ITR 171 (Pat) . 3 . Smt. Archana Shahi, learned Senior Standing Counsel for the Income Tax Department, however, pointed out that the assessee is a real estate developer and builder and the rental income generated is of the buildings constructed by the appellant which were not sold off. The business of the assessee, even as per the MoU was not confined to leasing out properties and the rental income generated can only be assessed as income from house properties and not as income from business . The learned counsel also pointed out that Rayala Corporation Pvt. Ltd Chennai Properties Investments Ltd. (supra) are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake over and adopt the firm carried on under the name and style of at Patna in the State of Bihar (which is a partnership business carried on by the signatories to these Memorandum and Articles of Association of the present Company) as a going concern including the goodwill, assets and liabilities thereof and to issue fully paid up shares of the Company of the face value equal to the value of the shares of the several partners respectively in the partnership; (ii) To carry on all or any of the business carried on by land developers and builders and to purchase, acquire, construct, re-construct, build, re-build, remodel, renovate equip, maintain, prepare for market, acquire by purchase, lease or otherwise any land, building, wholly or in part, floors, flats, apartments, shops, godown and to sell, let on hire or on rent, lease out on long/short term, trade or otherwise dispose of and to trade or deal in all real properties and estates buildings, shops, floors, flats, houses, godown or portions thereof to do and carry on all such businesses and transactions as are commonly and usually done or carried on by persons firms and bodies corporate as dealers of real properties and estates an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd allotment of fully paid up Equity Shares in the capital of the Company to the several partners respectively in the partnership and as more fully described hereinabove in the Memorandum of Agreement. 2. To carry on, establish, setup and maintain hospitals and nursing home and aftercare home for the reception and treatment of ailing person and persons suffering from illness and for reception and treatment of patients and persons during convalescence requiring medical and surgical attention and nursing and after care attendances and to provide medical relief to all suffering persons and to appoint and make arrangements for doctors, specialists in medical science and nurses and other persons and to conduct and carry on biological and pathological tests and examinations and to purchase, acquire and work latest sophisticated plants and machinery for the proper identification of diseases and for medical and surgical treatment and to do all other work and works allied to any of the above relating to surgical, pharmaceutical, biological and pathological tests and examination operations and investigations and to carry on the business as manufacturers buyers, sellers, improvers and exporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of both the assesses it has been stated that the buildings were handed over to the company in a finished mode and the company had also received advance for their buildings from the prospective purchasers, which sale has not fructified by transfer of ownership since the full consideration had not been rescind. The assessees had thus let out for rent the aforesaid building, the rental income of which is not a business income but the income on house property. The Assessing Officer has also looked at the specific object as extracted herein above from the MoA. The companies were holding the buildings as stock-in trade for more than 20 years. The income from house property has three conditions to be satisfied that the property should consist of buildings, the assessee should be the owner of the building and that the building should not be used by the owner for the purpose of business or profession carried on by him, the profits of which are chargeable to tax. In the present case, the Assessing Officer relies on CIT v. Chugandas and Co. reported in (1965) 55 ITR 17 (SC), which declare that even if an assessee carries on business of purchase and selling of buildings, income received fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. The fact remains that the Assessing Officer has clearly found that but for the lease of properties the assessee is not engaged in any other business. This is the precise facts on which Rayala Corporation and Chennai Properties (both supra) have been decided. 11 . In so far as Chero Medico and Developers Private Limited is concerned, there also the findings of the Assessing Officer are almost identical to that referred to in the other case; that the assessee was enjoying property rights over the buildings leased out and have been dealing with the buildings as its owner. Irrespective of the fact that they were held as stock in trade or fixed assets, it is admitted by the Assessing Officer that the lease of buildings is the only business carried on by the assessee. The assessee also has been receiving rental income from these buildings as is admitted by the assessee and accepted by the Assessing Officer. 12 . The First Appellate Authority rightly found the income to be from business and not under the head, income from house property, especially since the assessee has only the business of renting out buildings in the subject years. 13 . On the specific finding of facts made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
