9911796707
TMI Blog2019 (12) TMI 1552X X X X Extracts X X X X X X X X Extracts X X X X ..... ase Ld. Pr. CIT Alwar has grossly erred in law and facts in holding that the assessment order of Ld. AO is erroneous and prejudiced to the interest of revenue on the ground that profit on sale of ancestral property has to be taxed under the head income from business instead of capital gain, after computing capital gain u/s 45(2) of the IT Act 1961 on conversion of capital assets into "Stock in trade". 2. Apex Court Judgment is not applicable :- That on the facts and in the circumstances of the case Ld. Pr. CIT Alwar has grossly erred in law and facts in placing reliance on the judgment of Hon'ble Apex Court in the case of Raja J Rameshwar Rao Vs CIT (1961) 42 ITR 179(SC) which is per-se irrelevant and assessee facts are not identic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and in the circumstances of the case Ld. Pr. CIT Alwar has grossly erred in law and facts in not providing an opportunity to represent his case which is also specifically mandated u/s 236 of the Act and the principle of natural justice has been violated. 8. Proper Enquiry was Conducted :- That on the facts and in the circumstances of the case Ld. Pr. CIT Alwar has grossly erred in law and facts in holding that Ld. AO has not conducted proper enquiry / investigation before accepting the statement of the assessee.'' 2.1 The assessee is an individual and filed E-Return of income on 11-07-2015 declaring total income of Rs. 13,18,050/-. The scrutiny assessment was completed u/s 143(3) of the Act on 27-03-2017 whereby the AO accepted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in hand, the AO has accepted the capital gains declared by the assessee from the sale of the ancestral property after claiming the deduction u/s 54F of the Act. The ld. Pr.CIT has proposed to revise the assessment order only on the issue that provisions of Section 45(2) of the Act are applicable in this case as the assessee has sold the property by plotting to 59 different persons and consequently the income has to be assessed as business income instead of capital gains. The ld.AR further contended that even if the provisions of section 45(2) of the Act is applied in the case of the assessee, there would be no change so far as the capital gains arising from the said transaction and there will be no business income as the cost of stock in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of Bombay High Court in the case of India Hume Pipe Co. Ltd vs CIT , 107 CTR 95 (Bom.). Thus the ld.AR of the assessee submitted that when the assessee has never indulged in the business or trading activity of real estate and the transaction of the sale of the ancestral property is only sale of capital asset then selling the said property by plotting itself would not be regarded that the assessee was indulging in trading activity. Thus the ld.AR of the assessee submitted that the order passed by the ld. Pr.CIT is not sustainable in law and the same may be set aside. 2.3 On the other hand, the ld. DR submitted that it is a case of lack of enquiry on the part of the AO while passing the assessment order. Therefore, the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ony Kachhi Basti, Pani Pech, Jaipur for Rs. 23.00 lakhs on 11-02-2015 and claimed deduction u/s 54F thereon. You had also invested Rs. 50.00 lakhs in NHAI Bonds on 31-03- 2015 and claimed deduction u/s 54EC thereon separately. It is perused from the record that you had sold your ancestral property by plotting to 59 different persons and offered capital gain thereon for taxation, however, in view of the Judgement of Hon'ble Apex Court in the cas e of Raja J Rameshwawr Rao vs Commissioner of Income Tax (1961) 42 ITR 179 (SC) - the nature of such transaction should have been judged as business income instead of capital gain, after computing capital gain u/s 45(2) of the I.T. Act, 1961 on conversion of capital assets into ''stock in trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oses of section 48, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset.]'' Thus for the purpose of computing the capital gains, the fair market value of the asset as on the date of such conversion will be deemed as full value consideration received or accrued on transfer of capital asset and consequently the same amount will be taken as cost of acquisition of stock in trade. In the case in hand, the fair market value of the asset shall be taken as the valuation adopted by the stamp duty authority as provided u/s 50C of the Act being full value consideration and therefore, for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
