IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "C" NEW DELHI
BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER
AND SHRI A.T. VARKEY , JUDICIAL MEMBER
ITA No. 6007/Del/2012
Asstt. Year 2006-07
Hanemp Properties Pvt. Ltd. vs. DCIT
G-12, South Extension-1, Circle-12(1)
New Delhi. New Delhi.
(PAN AAACH0811M)
(Appellant) (Respondent)
Appellant by :Shri Umesh Gupta, CA
Respondent :Shri Satpal Singh, Sr. DR
ORDER
PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER
The is an appeal filed by the assesee directed against the order of Ld.
CIT(A)-X, New Delhi dated 10.10.2012 for asstt. year 2006-07.
2. Facts in brief: The assessee is a company, engaged in the purchase, sale and
renting of properties. The issue that arises before us is, whether the income that
arose to the assessee on sale of property, should on the facts and circumstances of
the case, be assessed under the head "Income from Business or under the head
"Capital Gains".
3. The assessee contends that its primary source of income is on account of a)
dividend b) interest and c) rental. He further submits that the asset in question was
purchased by the assesee in the year 1983 and rental income was derived there
ITA. No.6007/Del/2012
AY 2006-07
from. It is further contended that this asset was disclosed as investment of the
assessee. It is submitted that the intention of the assessee in purchasing the
property was to earn rental income and hence it was never treated as the assessee's
stock in trade. It is contended that in the earlier assessment years similar sale of
house properties, were treated as sale of capital assets and income there from
assessed under the head "Capital Gains".
4. Ld. DR contends that the primary purpose for which the assessee has been
formed, is to purchase or lease exchange or otherwise sell, hold, develop
immovable properties etc. It is submitted that the assessee has no stock-in-trade
and it has intentionally disclosed all these properties under the head "investments".
Reliance is placed on the main object of the memorandum of association and the
Assessing Officer's finding that the income should be assessed under the head
"Capital Gains" was supported.
5. On a careful consideration of the facts and circumstances of the case and a
perusal of the papers on record and the orders of the authorities below we hold as
follows :-
5.1 The property in question is, 227, Yusuf Sarai, New Delhi. This property was
acquired by the assessee company in the year 1983. Thus it is held by the assessee
for more than 22 years. The first appellate authority in his order admits that the
assessee has classified this asset, in its books of accounts as an investment. The
assessee was earning rental income and this rental income was being disclosed as
income from house property in the hands of company over the years. Similar sales
for the earlier asstt. years 2000-01 and 2001-02 were assessed as income from
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AY 2006-07
capital gains in orders passed u/s 143(3) by the AO. As rightly pointed out by the Ld.
Counsel for the assessee, the objects of the assessee company, as in the case of all
other companies, are drafted in a very broad manner, so as to enable the companies
to undertake any activity that they may desire in the future. This does not mean that
the assessee has been doing the business, as specified in all the objects in the
memorandum of association.
6. On a conspectus of the facts and circumstances of the case, we are of the
considered opinion that submissions of Ld. Counsel for the assessee have to be
upheld. We direct the AO to assess the income that arose to the assessee company
on account of sale of the property in question, under the head "long term capital
gains".
In the result the appeal of the assessee is allowed.
Order pronounced in the Open Court on 6th January, 2015.
sd/- sd/-
(A.T. VARKEY) (J.SUDHAKAR REDDY)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 6th January, 2015
`veena'
Copy of the Order forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
6. Guard File
By Order
Deputy Registrar
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