2018 (7) TMI 2394

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....questions of law for our consideration : "(1) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the receipt from the sale of property be assessed under the head "capital gains" and not under the head "business income" ? (2) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the respondent-assessee is entitled to deduction under Section 54EC of the Act ? 3. Regarding question No.1 : (a) In the previous year relevant to the subject assessment year, the respondent-assessee sold a building which was acquired in 1978. It offered the gain made on the sale of the building for tax under the head "capit....

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....ed an appeal to the Tribunal. The impugned order dated 14th March, 2014 of the Tribunal dismissed the Revenue's appeal. This by recording a finding of fact that the said building had been acquired in the year 1978 and ever since that date the property has been shown as an asset/investment and not as stock in trade. Further, it held that profit/gain on sale of the building is classifiable under the head capital gains. Support was also drawn from the fact that interest paid on the funds borrowed were not debited to the Profit and Loss Account but were capitalised. So far as classifying the rental income from the said building as business income is concerned, the impugned order holds that, by itself, this would not change the character of ....

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....xed as business income. This submission on behalf of the Revenue is contrary to the directions in the CBDT circular No.4/2007 dated 15th June, 2007 wherein in paragraph 10 thereof it is stated that it is possible for a tax payer to have two portfolios at the same time i.e. Investment portfolio (investment) and trading portfolio (stock in trade). Further this Court in Commissioner of Income Tax vs. Gopal Purohit (2010) 188 Taxman 140 has also held to the same effect. The second objection on behalf of the Revenue is that as the respondent had classified its rental income from the said building as business income that would by itself be evidence of it being stock in trade. In any case in such matters the totality of the facts are to be taken i....