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Hanemp Properties Pvt. Ltd.G-12, South Extension-1, New Delhi. Vs. DCIT Circle-12(1) New Delhi.
January, 07th 2015
                        DELHI BENCHES : "C" NEW DELHI


                                 ITA No. 6007/Del/2012
                                   Asstt. Year 2006-07

                    Hanemp Properties Pvt. Ltd.    vs. DCIT
                    G-12, South Extension-1,           Circle-12(1)
                    New Delhi.                         New Delhi.
                    (PAN AAACH0811M)
                    (Appellant)                       (Respondent)

                       Appellant by   :Shri Umesh Gupta, CA
                       Respondent     :Shri Satpal Singh, Sr. DR



        The is an appeal filed by the assesee directed against the order of      Ld.

CIT(A)-X, New Delhi dated 10.10.2012 for asstt. year 2006-07.

2.    Facts in brief: The assessee is a company, engaged in the purchase, sale and

renting of properties. The issue that arises before us is, whether the income that

arose to the assessee on sale of property, should on the facts and circumstances of

the case, be assessed under the head "Income from Business or under the head

"Capital Gains".

3.    The assessee contends that its primary source of income is on account of a)

dividend b) interest and c) rental. He further submits that the asset in question was

purchased by the assesee in the year 1983 and rental income was derived there
                                                          ITA. No.6007/Del/2012
                                                                    AY 2006-07

from. It is further contended that this asset was disclosed as investment of the

assessee. It is submitted that the intention of the assessee in purchasing the

property was to earn rental income and hence it was never treated as the assessee's

stock in trade. It is contended that in the earlier assessment years similar sale of

house properties, were treated as sale of capital assets and income there from

assessed under the head "Capital Gains".

4.      Ld. DR contends that the primary purpose for which the assessee has been

formed, is to purchase or lease       exchange or otherwise sell, hold, develop

immovable properties etc. It is submitted that the assessee has no stock-in-trade

and it has intentionally disclosed all these properties under the head "investments".

Reliance is placed on the main object of the memorandum of association and the

Assessing Officer's finding that the income should be assessed under the head

"Capital Gains" was supported.

5.     On a careful consideration of the facts and circumstances of the case and a

perusal of the papers on record and the orders of the authorities below we hold as

follows :-

5.1    The property in question is, 227, Yusuf Sarai, New Delhi. This property was

acquired by the assessee company in the year 1983. Thus it is held by the assessee

for more than 22 years. The first appellate authority in his order admits that the

assessee has classified this asset, in its books of accounts as an investment. The

assessee was earning rental income and this rental income was being disclosed as

income from house property in the hands of company over the years. Similar sales

for the earlier asstt. years 2000-01 and 2001-02 were assessed as income from

                                                                 ITA. No.6007/Del/2012
                                                                           AY 2006-07

capital gains in orders passed u/s 143(3) by the AO. As rightly pointed out by the Ld.

Counsel for the assessee, the objects of the assessee company, as in the case of all

other companies, are drafted in a very broad manner, so as to enable the companies

to undertake any activity that they may desire in the future. This does not mean that

the assessee has been doing the business, as specified in all the objects in the

memorandum of association.

6.        On a conspectus of the facts and circumstances of the case, we are of the

considered opinion that submissions of Ld. Counsel for the assessee have to be

upheld. We direct the AO to assess the income that arose to the assessee company

on account of sale of the property in question, under the head "long term capital


          In the result the appeal of the assessee is allowed.

          Order pronounced in the Open Court on 6th January, 2015.

                sd/-                                     sd/-
            (A.T. VARKEY)                         (J.SUDHAKAR REDDY)
           JUDICIAL MEMBER                       ACCOUNTANT MEMBER
Dated: 6th             January, 2015
Copy of the Order forwarded to:
1.    Appellant
2.    Respondent
3.    CIT
4.    CIT(A)
5.    DR
6.    Guard File
                                                             By Order

                                                             Deputy Registrar

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