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TMI Blog2023 (8) TMI 1190X X X X Extracts X X X X X X X X Extracts X X X X ..... nverted into stock in trade to be introduced to the partnership firm. This alone is the property that is converted from agricultural land to plots to be introduced as stock in trade of the partnership firm. This alone is in dispute in this case. Though the assessee sold two more plots one at Hosur and other at Gafoornagar villages, there is no dispute and AO himself accepted the capital gains and allowed exemption u/s 54F - We, therefore, deal with this disputed aspect in detail. The entire extent of 6.55 acres which the assessee converted into stock in trade was of an extent of 1,62,470 sq.ft. The conversion took place in the financial year 2012-13. Plots after conversion were sold in the financial - Assessee claims to have computed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y grievance and it is only a matter of verification of facts and figures. Without undertaking such an exercise, Revenue preferred this appeal. We, therefore, no merits in the appeal of Revenue Insofar as the principle is concerned. To that extent, we confirm the impugned order. Only thing that has to be verified is whether the assessee computed the capital gains by taking the Fair Market Value as on the date of conversion as the sale consideration and deducting there from the indexed cost of acquisition applicable to the year of sale. If it is so, the addition cannot be sustained. We direct the AO to cause this verification and if it is found that the assessee computed the capital gains by taking the Fair Market Value as on the date of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the stock in trade. Apart from this, he also sold two plots which were purchased by him. The assessee treated the plots as capital assets and admitted the profit arising out of such sale under the head long term capital gain, by taking the value of such plots as on the date of conversion as the cost of acquisition and worked out the income after allowing the indexed cost of acquisition. Assessee also claimed deduction under section 54F of the Act. 3. According to the learned Assessing Officer, the converting of the agricultural land as the commercial land, dividing the same into plots, allotting numbers thereto and selling the same constitute adventure in the nature of trade and referring to the decision of the Hon ble Apex Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently sold and, therefore, the entire income from sale of plots was income from capital gains and not income from business; whereas the income from capital gains would only be to the extent of the Fair Market Value as on the date of conversion. Further according to the Revenue, the assessee is entitled to the relief under section 54F of the Act only to the extent of the capital gains as computed above and the rest of income on the sale of stock in trade is liable to be assessed as income from business. 6. Learned AR submitted that assessee acquired 6.55 acres of land for a sum of Rs. 24,01,621/-, formed into a partnership firm with his neighbour, converted such 6.55 acres as stock in trade and subsequently, sold away such land making it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with this disputed aspect in detail. 8. The entire extent of 6.55 acres which the assessee converted into stock in trade was of an extent of 1,62,470 sq.ft. The conversion took place in the financial year 2012-13. Plots after conversion were sold in the financial years 2012-13, 2013-14, 2014-15 and 2015-16 respectively. The sale consideration thereof was Rs. 5,48,30,437/-, Rs. 4,26,98,192/-, Rs. 3,19,04,005/- and Rs. 87,76,813/- respectively. Assessee claims to have computed the capital gains on the sale of these plots by taking the Fair Market Value as on the date of conversion as the cost of acquisition. By indexing the same with reference to the year of sale, the assessee computed the capital gains as Rs. 1,99,14,837/-, Rs. 1,20,49,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence to the Fair Market Value as on the date of conversion and by deducting the indexed cost of acquisition applicable to the year of sale. From the additional grounds, we understand that the Revenue has no grievance if the capital gains are computed by taking the sale consideration as the Fair Market Value as on the date of conversion. In such an event, Revenue cannot have any grievance and it is only a matter of verification of facts and figures. Without undertaking such an exercise, Revenue preferred this appeal. 12. We, therefore, do not find any merits in the appeal of Revenue Insofar as the principle is concerned. To that extent, we confirm the impugned order. Only thing that has to be verified is whether the assessee computed the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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