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TMI Blog2022 (1) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, one cannot go by guideline value of property to determine fair market value of the property, including for the purpose of conversion of capital asset into stock in trade. To this extent reasons given by the Assessing Officer to adopt fair market value of the property at the time of conversion of capital asset into stock in trade at ₹ 100/- cannot be sustained. Similarly, valuation of closing stock by adopting guideline value as on 31.03.2012 also cannot be accepted. However, fact remains that the assessee has also not able to justify adoption of fair market value at ₹ 250/- per sq.ft at the time of conversion of capital asset into stock in trade. Therefore, considering fact that both the parties have failed to just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciate that the re-computation of taxable total income as per the assessment order on various facets was wrong, erroneous, unjustified, incorrect and not sustainable in law. 4. The CIT (Appeals) erred in adopting the stamp duty value for converting\ e agricultural land into housing plots while overlooking the explanation \ offered for the computation/trading account furnished by the Appellant ) without assigning proper reasons and justification. 5. The CIT (Appeals) failed to appreciate that the recasting of the trading account for the year ended 31.3.2012 on various facets was wrong, erroneous, unjustified, incorrect and not sustainable in law. 6. The CIT (Appeals) failed to appreciate that the legal issue of the applicabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d thus, derived income from sale of plots to be assessable under the head income from business. The Assessing Officer after considering relevant facts and has also taken note of value adopted by the assessee for conversion of capital asset into stock in trade as per provisions of section 45(2) of the Act, has disputed rate adopted by the assessee for conversion of land into stock in trade and accordingly, has adopted a sum of ₹ 25 lakhs per acre as fair market value of the land as on date of conversion and accordingly, reworked gross profit derived from real estate business, after valuing closing stock of the assessee at ₹ 117.39 per sq.ft. Thus, the Assessing Officer has arrived gross profit at ₹ 8,46,963/- for year endin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed DR, on the other hand, strongly supporting orders of the lower authorities submitted that the assessee has adopted fair market value of the land at ₹ 250/- per sq.ft., which is neither backed by any evidence nor supported by guideline value of property as on date of conversion and thus, the Assessing Officer has rightly adopted guideline value of property as on date of conversion and hence, there is no error in findings recorded by the learned CIT(A) to sustain additions made by the Assessing Officer. 6. We have heard both the parties, perused material available on record and gone through orders of the authorities below. There is no dispute with regard to fact that when capital asset was converted into stock in trade, it was an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s given by the Assessing Officer to adopt fair market value of the property at the time of conversion of capital asset into stock in trade at ₹ 100/- cannot be sustained. Similarly, valuation of closing stock by adopting guideline value as on 31.03.2012 also cannot be accepted. However, fact remains that the assessee has also not able to justify adoption of fair market value at ₹ 250/- per sq.ft at the time of conversion of capital asset into stock in trade. Therefore, considering fact that both the parties have failed to justify respective rates adopted for conversion of capital asset into stock in trade, we deem it appropriate to adopt a sum of ₹ 200/- per sq.ft as fair market value of the property as on date of conversi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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