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TMI Blog1997 (6) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 small as Rs. 23,400. As the property was purchased by way of business venture, the rental income should be assessed under the head 'Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eafter, 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 property in question was acquired by the assessee-company with a view to carry on business of the development of the property and sale thereof. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 narrow zone and have not been disputed by the learned Departmental Representative. Though the property in question was purchased with the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 activity referred to by the High Court, viz., the acquisition of a property for being let out can be said to be only a preparatory stage (analogo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 1,64,800 should have been entirely adjusted against the loss of Rs. 2,81,978 assessed under the head 'Income from house property'. In this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s', 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 section 71(3) held that in case of any ambiguity, the construction beneficial to the assessee should be adopted. In the instant case, the loss arising ..... X X X X Extracts X X X X X X X X Extracts X X X X
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