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TMI Blog2016 (2) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... a in the case of Octavis Steel [2002 (5) TMI 204 - ITAT CALCUTTA ] and Mumbai ‘D’ Bench in the case of Ramesh Abaji Walwavalkar [2013 (4) TMI 480 - ITAT, MUMBAI]. We find no infirmity in the order of Ld.CIT-A and he rightly followed the principle laid down by the Special Bench of Kolkata in directing the AO to compute capital gain in pursuance of the u/s 45(2) read with section 2(47)(iv) and to delete the addition made by the AO by treating the same as business income. - Decided against revenue - ITA No. 553/Kol/2012 - - - Dated:- 15-1-2016 - Shri P. M. Jagtap, A.M. Shri S.S.Viswanethra Ravi, J.M. For The Appellant : Shri Tanuj Niogi, JCIT, Sr.DR For The Respondent : Shri Somnath Ghosh, Advocate ORDER Per Shri S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee filed revised return on 3.11.2008 wherein the assessee not claimed deduction under section 80IB of the Act, but, however, computed capital gain for transfer of land. 4. During the assessment proceedings, the AO was of the view that the provisions of sec 45(2) read with sec 2(47)(iv) are not applicable to the assessee company for the reason that the assessee did not sell the land as it is and it sold the same after constructing a building and treated the entire income as business income and also observed that the assessee did not compute the capital gain in the original return, but, it did compute the same in its revised return. 5. Before the CIT-A, The assessee submitted that: The assessee company had acquired a lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me which works out to ₹ 203,059/- However the AO did not take cognizance of long term capital gain and assessed the same as business income on the ground that the assessee was not trading in land but it was in development and construction business. As such no capital gain arose. 6. Before the Ld.CIT-A, The assessee also relied on the Calcutta Special Bench in the case of Octavis Steel and Co. Ltd. v. ACIT (2003) 260 ITR (AT) 109 and The Hon ble Calcutta High Court in the case of CIT v. Estate Of Omprakash Jhunjhunwala 254 ITR 152 (Cal) and Calcutta ITAT in the case of The Statesman Ltd. v. ACIT 295 ITR (AT) 388 (Cal). 7. The Ld.CIT-A while considering the submissions and case laws relied on by the assessee directed the AO to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Octavis Steel and Co. Ltd. v. ACIT reported in 83 ITD 87 (KOL.) (SB) and Mumbai D Bench in the case of Ramesh Abaji Walwaval kar vs ACIT, Range-3 reported in (2012) 24 taxmann.com321(Mum). 9. Heard both Ld.DR and Ld.AR, perused the material on record. Therefore the only issue before us whether the LD.CIT-A is right in directing the AO to compute capital gain in pursuance of the u/s 45(2) read with section 2(47)(iv) of the Act or not? For better understanding the provision is reproduced here as below: Sec 45(2) reads as under: (2) Notwithstanding anything contained in sub-section (1), the profits or gains arising from the transfer by way of conversion by the owner of a capital asset into, or its treatment by him as stock-in-tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other provisions. Under sub-section (2) of section 45, it is clear that capital gain shall be charged in the previous year in which such stock-in-trade, which is known to be so only after conversion, is sold or otherwise transferred Admittedly, the transfer of stock-in-trade in the present case was effected by way of registered deed of conveyance during the present assessment year. Therefore, the first appellate authority was justified in holding that capital gain was to. be computed in the previous year even though that conversion was effected before 1-4-1985. This sub-section supersedes provision of sub-section (1) and provides for charging of capital gain in the year when the converted stock-in-trade is sold or otherwise transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer of the capital asset. In the present case, the fair market value of land on the date of conversion at ₹ 2,49,00,000 was taken by the assessee as the full value of consideration for the purpose of computing capital gain and since the same was in accordance with the provisions of section 45(2), the same should be accepted In that view of the matter, the Assessing Officer is directed to adopt 'the fair market value of land at ₹ 2,49,00,000 as the full value of consideration for the purpose of computing capital gain as claimed by the assessee . 13. After going through the order of Ld.CIT-A, after perusing case laws relied on by the assessee and provision thereof, in the present case since the property has been transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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