TaxTMI 
TaxTMI 
2015 (4) TMI 192
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.... is not disputed that a partnership firm was constituted in accordance with the provisions of Partnership Act, 1932 (herein after referred to as 'Act,1932') consisting three partners, namely Smt. Madhu Gupta, Smt. Manju Gupta and Sri S.C. Lal Agarwal. In the assessment year 1986-87 (financial year 1885-86), one of the partners Sri Sheo Charan Lal Agarwal retired from the firm, as a result whereof, the firm was reconstituted by executing another partnership deed. The requisite formalities under the Act, 1932 were completed. Thereafter the firm applied for registration with Income Tax Authorities and the Assessing Officer vide order dated 03.02.1988 accepted registration of firm under Income Tax Act, 1961 (hereinafter referred as to 'Act, 1961'). Subsequently, registration of firm under Act, 1961 was cancelled by the Assessing Officer under Section 186 (1) vide order dated 7.4.1993 on the ground that firm was not carrying on any business but was deriving income only from letting out property which was income liable to be computed in accordance with section 22 to 27 of Act, 1961 i.e. income from property and not under the head of income for business or profession. 4....
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.... to the extent of 47% each and 3rd Sri S.C. Lal Agarwal having share of only 6%. This was a clandestine attempt to evade tax in the garb of forming a firm. 8.It took a view that consideration of the aforesaid firm only for the purpose of earning rental income is nothing but an attempt to evade tax. No genuine firm for undertaking any 'business activity' was constituted. It further observed that as per partnership deed, only business activity mentioned is for collecting rent etc. which would not constitute 'business'. House income therefrom, is not liable to be treated as an income for business or profession. It is to be treated as income from property. In this view of the mater, he held that registration of firm was not justified and cancelled the same. 9.The Deputy Commissioner, Income Tax concurred with the view taken by Assessing Officer and dismissed appeal but the Tribunal has taken a different view. It has observed that firm was actually in existence. Looking to the purpose mentioned in partnership-deed, it also took a view that taking property on lease and carrying on business of collection rent etc. may constitute a 'business' activity and ther....
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....421 ITR 49 (SC), the Court said that transaction of acquiring leases and granting sub-leases are in the nature of trading within the objects of the company and not enjoyment of property as land owner and the arrangement determines in which of the two categories, it falls. It is the substance and not the form of the matter that must be ascertained. 15. In S.G. Mercantile Corporation P. Ltd. v. Commissioner of Income Tax, Calcutta, [1972] 83 ITR 700 (SC), the Court said that dealing with any real property, as also activity of talking a property on lease, setting up a market thereon and letting out shops and stalls in the market can constitute business activity. 16. In Attukal Shopping Complex P. Ltd. v. Commissioner of Income Tax, [2003] 259 ITR 567 (Kerala), the Court held that income from building forms parts of business and property. 17. In the present case, the Tribunal as a last court finding of fact has recored its findings as under : "The activities of the firm were very much there though such activities related only to leasing out the property and realization of rent etc. As per the partnership deed dated 16.3.83, the firm was constituted for carrying out certain ....
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....of fact recorded by the Tribunal which is not shown perverse. 23. In Commissioner of Income Tax v. P. Mohanakala, [2007] 291 ITR 278 (SC), the Court held that the concurrent finding of facts, predicated on material available on the record cannot constitute questions of law much less substantial question of law. This is what reiterated in Commissioner of Agricultural Income Tax v. M.N. Moni, [2007] 291 ITR 387 (SC). 24.In T. Ashok Pal v. Commissioner of Income Tax, [2007] 292 ITR 11 (SC), it was held that High Court should not ordinarily disturb the finding by the Tribunal on question of fact and a question of law would arise, if at all, only after accepting the finding of fact in correct. 25.As proposition, it cannot be said that there would not be any business activity in leasing out a building and collecting rent therefrom so as to bring the profits within the ambit of income from business in profession. In the present case, the Tribunal as a last court of fact has recorded a specific finding in favour of assessee and in the absence of anything to show that the same is perverse or contrary to record or based on misreading, we do not find any reason to take a different vi....