1994 (12) TMI 54

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..... and in the circumstances of the case, the Tribunal was justified in holding that for the purpose of determining the cost on the date of conversion, the market value of the asset as on that date has to be taken into account in regard to any sale of the land effected thereafter ? " The assessee is a public limited company incorporated on October 22, 1946, with the object of acquiring the business carried on in the firm name and style of " P. Kashinath and Co. " (for short, referred as " the firm "). The firm was carrying on the business of textile processing and had acquired a factory in the year 1939. In the year 1946, the firm decided to shift its factory from Parel to Chembur and since a considerable area of land was required by the fir .....

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..... not below Rs. 70 per sq. yard. This was followed by another resolution passed at the general body meeting of the assessee-company on July 26, 1974. The said land when originally acquired was shown as a " fixed asset " in the balance-sheet of the assessee-company. However, after permission to sell the same was obtained from the Government of Maharashtra and the necessary resolutions as aforesaid were passed, the same was shown as a " current asset " of the assessee-company in the balance-sheet of the assessee-company for the subsequent years. Certain journal entries recording this change were made in the books of account of the assesseecompany. This was done on September 30, 1974. In the assessment year 1974-75, the assessee-company clai .....

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..... chased was intended to be used by the assessee-company for construction of houses for its employees as well as for expansion of its industrial undertaking. There appears to be no doubt that originally the purchase of the said land was in the nature of " capital investment ". However, the subsequent events which had taken place, namely, the permission which the assessee -company sought from the Government for sale of the said land, the grant of permission by the Government permitting the assessee-company to sell the said land, the resolutions passed by the board of directors of the assessee-company as also at the general body meeting of the shareholders of the assessee -company and the book entries which the assessee-company made in its book .....

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