COMMISSIONER OF INCOME-TAX vs. GAEKWAD AND COMPANY

ITR/44/1994HC GujaratGJHC24020122199431 August 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI6 pages
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What were the facts?

The assessee, Gaekwad and Company, is a firm constituted for running a hotel and other businesses. One partner contributed 'Kunj Bungalow' property as capital at Rs. 1,50,000. For assessment years 1977-78 and 1978-79, the Assessing Officer assessed income from 'Kunj Bungalow' under 'income from house property'. The assessee appealed, arguing it should be under 'business'. The Appellate Assistant Commissioner upheld the AO's order. The assessee then appealed to the ITAT. The ITAT directed the income from 'Kunj Bungalow' to be treated under 'business'. The judgment also refers to a deletion of income from 'Jadav Bungalow' by the Tribunal, which is also under challenge. The Commissioner of Income-tax is the applicant (revenue), and Gaekwad and Company is the respondent (assessee). The assessment years are 1977-78 and 1978-79.

What did the High Court hold?

The High Court held that the Tribunal was right in law in directing the Income Tax Officer to treat the income from the property known as 'Kunj Bungalow' under the head 'Business'. The Tribunal's finding was based on the property being brought into the partnership for business exploitation, its income being assessed under 'business' from inception, and the firm's registration/renewal despite the property being the sole source of income in earlier years. The mere hiring out of the property in the previous year was not considered a ground for a different view. The revenue could not point out anything to dislodge the Tribunal's findings. Therefore, Question No. 1 was answered in the affirmative, in favour of the assessee. Regarding Question No. 2, the revenue fairly conceded that the issue concerning the deletion of income from 'Jadav Bungalow' was concluded by this Court's prior decision in the assessee's own case. Thus, Question No. 2 was also answered in the affirmative, in favour of the assessee. The reference was disposed of accordingly.

What were the issues?

1. Whether, the Appellate Tribunal is right in law in directing the I.T.O. to treat the income from property known as 'Kunj Bungalow' under the head 'Business'? (Question of law turning on the interpretation of the head of income under which property income should be assessed). 2. Whether, the Appellate Tribunal is right in law in deleting the income from property known as 'Jadav Bungalow'? (Question of law turning on the assessment of income from 'Jadav Bungalow'). Assessee's contentions: Not recorded as there was no appearance. Revenue's contentions: The learned Standing Counsel for the revenue relied upon the findings of the Assessing Officer and the Appellate Assistant Commissioner in support of her submissions regarding 'Kunj Bungalow'. For 'Jadav Bungalow', the revenue conceded that the controversy was concluded by a prior decision of the High Court in the assessee's own case.

Which sections of the Income-tax Act were involved?

Section 256(2),Section 185

AI-generated summary — verify with the full judgment below

ITR/44/1994 1/6 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 44 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 GAEKWAD AND COMPANY - Respondent(s) ========================================================= Appearance : MRS M.M.BHATT for Applicant(s) : 1, NOTICE SERVED for Respondent(s) : 1, ======================================================== CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 31/08/2005 ORAL JUDGMENT (Per : HONOURABLE MS.JUSTICE H.N.DEVANI) 1 The Income Tax Appellate Tribunal, Ahmedabad Ben

The order continues below.

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