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TMI Blog2018 (11) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment year 2010-11 wherein the capital gains has been determined at Nil, has not been dislodged by the Revenue and that position continues to remain. As long as this position continues, the cost of acquisition in the hands of the assessee company for the purpose of computing the profits or gains on the sale of the said converted stock-in-trade being land during the years only same are sold cannot be disturbed. Obviously what has been sold by the assessee is stock-in-trade and its business is the sale of the land represented as stock-in-trade. Obviously, the business income would be the difference between the sale consideration received by the assessee on the transfer of the said stock-in-trade being the land and the cost as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this common order. 4. It was submitted by ld.D.R that the assessee is a domestic company, which had sold certain lands. It was a submission that the assessee-company was originally incorporated on account of conversion of partnership firm, and the date of conversion into the present assessee company was 18.11.2009. It was a submission that the assessee firm was created and the partners of the assessee firm have brought in the land as their capital. The said firm had re-valued its said lands being the fixed asset on 11.05.2009 and was converted into the company on 18.11.2009 taking over all the assets and liabilities of the firm on the date of conversion as a going concern. It was a submission that the fixed assets of the firm consisti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as short term capital gains. It was a submission that on appeal, the Ld.CIT(A) had deleted the addition made by the ld. Assessing Officer by following the decision of the Co-ordinate Bench of this Tribunal in the case of ACIT Vs. B.V.Reddy Enterprises Private Limited in ITA Nos.250 251/Mds./2011 dated 03.03.2014. It was a prayer that the order of the CIT(Appeals) is liable to be reversed. 5. In reply, the ld.A.R vehemently supported the order of Ld.CIT(A). 6. We have considered the rival submissions. At the outset, the determination of the short term capital gains by adopting the cost of the previous owners being partnership firm as done by the ld. Assessing Officer, is prima facie erroneous. Clearly, the partnership firm had appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Market Value as the value of conversion into stock-in-trade, and the value on which the assessee company took over the assets from the erstwhile firm as the cost of acquisition. Thus, computation for assessment year 2010-11 wherein the capital gains has been determined at Nil, has not been dislodged by the Revenue and that position continues to remain. As long as this position continues, the cost of acquisition in the hands of the assessee company for the purpose of computing the profits or gains on the sale of the said converted stock-in-trade being land during the years only same are sold cannot be disturbed. An example will make it clear more. Suppose X purchased a plot in the year 1981 for ₹ 1/- lakh and converted it into stock in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous owner, he could have done so when computing the capital gains for the assessment year 2010-11 when the asset was converted from investment to stock-in-trade. The A.O having missed the bus for assessment year 2010-11 cannot make the said adjustment during the impugned assessment years. Perusal of the order of the CIT(Appeals) in paras 4.1.2 to 4.1.4 clearly shows that the Ld.CIT(A) has taken this issue into consideration when deciding the appeal. Further, perusal of the decision of the Co-ordinate Bench of this Tribunal in the case of ACIT Vs. B.V.Reddy Enterprises Private Limited referred to supra, which has been relied upon by the Ld.CIT(A) for the purpose of giving relief to the assessee, also clearly shows that this is th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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