COMMISSIONER OF INCOME-TAX vs. BOMBAY GUJARAT ART SILK VEPARIMAHAJAN CO.OP.SHOPS & WAR.SOC.

ITR/69/1994HC GujaratGJHC24020147199422 September 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI4 pages
AI SummaryRemanded

What were the facts?

The assessee, Bombay Gujarat Art Silk Vepari Mahajan Co. Op. Shops & War. Soc., is a registered Co-operative Society that owns a building complex primarily comprising shops and godowns. The Assessing Officer rejected the assessee's claim to treat income from this complex as business income. The assessee's appeal was allowed by the Commissioner (Appeals) and subsequently by the Income-tax Appellate Tribunal (ITAT). The ITAT's decision was based on its prior ruling in the case of Surat Textile Market Co-operative Shops and Warehouse Society Ltd., finding the facts to be similar. The assessment years under consideration are 1977-78 to 1982-83, corresponding to accounting periods ending June 30, 1976, to June 30, 1981. The Revenue has filed a reference application to the High Court.

What did the High Court hold?

The High Court answered both questions in the affirmative, in favour of the assessee and against the Revenue. The Court applied the ratio of its earlier decision in the case of Commissioner of Income-tax Vs. Surat Textile Market Co-operative Shops and Warehouse Society Ltd. ([2003] 264 ITR 289 (Guj)). In that precedent, income from shops and godowns allotted to members by way of nominal rent was held to be income from other sources, and income from a restaurant and residential hotel was treated as income from house property. Since the break-up of the income for the present assessee was not available, the Tribunal was directed to adjust its decision in accordance with the High Court's judgment after recording the details of the income derived by the assessee. The reference was disposed of accordingly.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in concluding that the activity of the assessee co-operative society constituted business activities? (Question of law) 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the income of the co-operative society should be taxed under the head 'business income' and not under the head 'income from house property' or 'income from other sources'? (Question of law) Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: Not recorded in the judgment. The judgment refers to the Revenue's instance in seeking the reference.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 256(2)

AI-generated summary — verify with the full judgment below

ITR/69/1994 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No.69 of 1994 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MS.JUSTICE H.N.DEVANI ===================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ===================================================== COMMISSIONER OF INCOME-TAX - Applicant(s)

Versus BOMBAY GUJARAT ART SILK VEPARI MAHAJAN CO.OP.SHOPS & WAR.SOC. - Respondent(s) ===================================================== Appearance : MR MANISH R BHATT for Applicant(s) : 1, MR JP SHAH for Respondent(s) : 1, ===================================================== CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 22/09/2005 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA)

The order continues below.

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