1983 (11) TMI 92

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....an income from business and added it to the business income of the assessee. 2. The CIT (Appeals) accepted the claim of the assessee and directed the ITO to treat the same as long-term capital gain. The departments has now come in appeal before us. 3. The only ground raised is that the CIT (Appeals) has erred in treating the said income as long-term capital gain and not business income. 4. The facts. as found by the ITO and recorded in the assessment order are as follows. The assessee was carrying on business in dry fruits in his shop situated in the Sheikh Menon Street as a tenant. On 28th October 1975, the assessee purchased a building which was situated near this shop. This building was, at the time of purchase by the assessee f....

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.... could be a business income. This contention of the assessee was accepted by the CIT (Appeals). He observed that there was no transfer of immovable property as such by the assessee. However, according to him, the right of possession of the said shops was a capital asset of the assessee as distinguished from the assessee's stock-in trade, particularly when the assessee was not a dealer in real estate. Consequently, the transaction of transfer of possession and obtaining money in the course thereof was in the nature of transfer of capital asset, as defined in s. 2 (14) of the IT Act, 1961, and the income arising therefrom was long-term capital gains. 6. Before us, the ld. departmental representative relied on the reasons given by the ITO a....

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....enants were used by the assessee for business purposes, i.e., for extension of its already existing business of dry fruits till the time when those shops were re-assigned. The period for which such user was made is a long one. Another fact found by the ITO is that the said building was near the shop in which the assessee was carrying on its business of dry fruits. All these facts are consistent with the case of the assessee that the intention in purchasing the building was not to deal in real estate, but to use the shops in that building, vacated by the tenants, for the extension of its original business of dry fruits. In the circumstance, the building in question would come within the definition of the term 'capital asset' as defined in s.....