2011 (8) TMI 325

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....nbsp; 2. Whether in the facts and circumstances of the case, the Tribunal was right in treating the property as a capital asset on the ground that the interest on borrowals was capitalised?"   2. The Assessee as a Kartha of the HUF had filed a return of income of Rs.26,45,315/-, under the head "Long Term Capital Gains". The assessment was sought to be taken up for consideration under Section 143 of the Income Tax Act, 1961, treating the said income as business income.   3. The asseseee filed an appeal before the Commissioner of Income Tax Appeals. Aggrieved by the order of the dismissal, the assessee went on a further appeal before the Tribunal. The Tribunal pointed out that the ownership of the asset with the HUF assesse....

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....s.   6. During the process of assessment, the Assessing Officer noted that the Kartha of the assessee, Palanichamy, in his individual capacity was doing real estate business and so too the said Palanichamy's wife doing real estate business. Looking at all these facts, the officer came to the conclusion that the assessee was carrying on business in real estate and hence, the income should be assessed only under the head "business".   7. A look at the order of the Commissioner of Income Tax (Appeals) shows that in the background of law declared by the Apex Court in the decision reported in G.Venkataswami Naidu and Co., Vs. CIT [(1959) 35 ITR 594], the Commissioner of Income (Appeals) tested the facts and he came to a conclusio....

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....the Kartha in his individual capacity and his wife were carrying on business in the real estate by itself does not lead to an interference that the HUF was holding the property only as a trading asset for the purpose of earning income as the business income.   11. As rightly pointed by the learned counsel for the assessee even though a single transaction by itself could constitute business, yet as rightly pointed out by the Tribunal the mere fact that the assessee sold a portion of the property to wriggle out of the financial hardship would not make the activity, an adventure in the nature of trade.   12. The findings of the Tribunal is that the assessee never treated this asset as stock in trade remains unchallenged before ....