Commissioner of Income Tax-18 v. M/s.Preeti Enterprises
[Citation -2014-LL-1212]

Citation 2014-LL-1212
Appellant Name Commissioner of Income Tax-18
Respondent Name M/s.Preeti Enterprises
Court HIGH COURT OF BOMBAY
Relevant Act Income-tax
Date of Order 12/12/2014
Assessment Year 2007-08
Judgment View Judgment
Keyword Tags capital gain • real estate
Bot Summary: If the Assessee was only investing in the property there was no occasion to set up such a partnership y firm and if in the meanwhile and upon setting it up it was discovered ba that it was not viable, steps should have been taken to amend the partnership deed and particularly with regard to scope of the om partnership business. In addition to this, when this property at Khetwadi, Mumbai was acquired in 1997, the Assessee made several applications seeking clearances and permissions from the B Government Authorities so as to develop and construct upon the property, this would run counter and rather negate the position that the property was held as investment. Though they have acquired the ig property in Mumbai and Khetwadi in 1997, they could not do anything beyond making some applications. There were sitting H tenants and 72 in number on the property. They waited for another nine years and ultimately disposed of this property in 2006. If the y business was of Builder and Developer, it was inconceivable in a ba city like Mumbai, where the prices of the lands are sky rocketing, that the Builders and Developers will not do any business, even om after they have set up a firm of Builder and Developer. The period of nine years coupled with the fact that barring one project nothing B more was undertaken, leave alone, completed by the firm, that both the Commissioner and the Tribunal reached this conclusion that the property was acquired for dealing in real estate investment.


1/4 itxa-1-13.doc IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION rt INCOME TAX APPEAL NO.1 OF 2013 ou Commissioner of Income Tax-18 ...Appellant v/s. M/s.Preeti Enterprises ...Respondent C Mr.A.R.Malhotra with Mr.N.A.Kazi and Ms.Padma Divekar for Appellant. Ms.Beena Pillai for Respondent. ... h ig CORAM : S.C.DHARMADHIKARI & A.A. SAYED, JJ. DATED : 12 DECEMBER 2014 H P.C. This Appeal of Revenue challenges order passed by Tribunal on 30 May 2012 in Income Tax Appeal y No.6214/Mum/2010. Assessment Year is 2007-08. ba 2. only point, which was argued before Tribunal om and reiterated before us, is that Commissioner of Income Tax (Appeals) has erred in law in directing Assessing Officer to treat income of Rs.5,71,03,487/- as income from Long Term Capital B Gain in stead of business income. Uday Kambli 1/4 ::: Downloaded on - 13/08/2015 12:57:49 ::: 2/4 itxa-1-13.doc 3. return of income was filed disclosing rt Rs.5,87,13,380/- and it was selected for scrutiny. detailed ou questionnaire was dispatched with statutory notice, to which Assessee responded. It was noted by Assessing Officer that Assessee has sold property at Khetwadi, 10 th Cross Lane, C Mumbai and profit from sale of this property was shown as Long Term Capital Gain . h 4. ig Assessing Officer held that partnership firm of husband and wife was constituted for purpose of doing business H as Builder & Developer. If Assessee was only investing in property, then, there was no occasion to set up such partnership y firm and if in meanwhile and upon setting it up it was discovered ba that it was not viable, steps should have been taken to amend partnership deed and particularly with regard to scope of om partnership business. In addition to this, when this property at Khetwadi, Mumbai was acquired in 1997, Assessee made several applications seeking clearances and permissions from B Government Authorities so as to develop and construct upon property, this would run counter and rather negate position that property was held as investment. Uday Kambli 2/4 ::: Downloaded on - 13/08/2015 12:57:49 ::: 3/4 itxa-1-13.doc 5. Both Commissioner and Tribunal have found rt that reliance placed by Revenue on judgment of ou Hon'ble Supreme Court in case of Rajputana Textile Agencies Ltd. v/s. CIT (1961) 42 ITR 743 was misplaced. present case would denote that partnership firm of husband and wife undertook C only one project and completed it only after more than eight years. They did not have any business. They realized that developing h property cannot be their business. Though they have acquired ig property in Mumbai and Khetwadi in 1997, they could not do anything beyond making some applications. There were sitting H tenants and 72 in number on property. They waited for another nine years and ultimately disposed of this property in 2006. If y business was of Builder and Developer, it was inconceivable in ba city like Mumbai, where prices of lands are sky rocketing, that Builders and Developers will not do any business, even om after they have set up firm of Builder and Developer. period of nine years coupled with fact that barring one project nothing B more was undertaken, leave alone, completed by firm, that both Commissioner and Tribunal reached this conclusion that property was acquired for dealing in real estate investment. In such circumstances, we do not find that Tribunal committed any error Uday Kambli 3/4 ::: Downloaded on - 13/08/2015 12:57:49 ::: 4/4 itxa-1-13.doc of law apparent on face of record. Its order cannot be rt termed as perverse either. reliance placed by Mr.Malhotra on ou judgment of Hon'ble Supreme Court in case of Rajputana Textile (Agencies) Ltd. is misplaced. Apart from fact that Hon'ble Supreme Court was dealing with business in C shares, what it discovered and on facts is that transaction of purchase of sale of shares of about 13 lakhs shares was of h commercial nature and held to be adventure in nature of trade. ig In such circumstances, conclusions have been recorded. We do not see any assistance from such conclusions to present set H of facts and circumstances, they have been already noted above. In such circumstances, this Appeal does not raise any substantial y question of law. Finding of fact cannot be termed as perverse or ba vitiated by any error law apparent on face of record. Consequently, Appeal fails and is dismissed. No order as to om costs. . B (A.A. SAYED, J.) (S.C.DHARMADHIKARI,J.) Uday Kambli 4/4 ::: Downloaded on - 13/08/2015 12:57:49 ::: Commissioner of Income Tax-18 v. M/s.Preeti Enterprise
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