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TMI Blog1986 (2) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs were reopened under the provision of s. 147 read with s. 148 of the Act. The original assessment was completed on basis of the total income of Rs. 8141 as declared by the assessee. The ITO in course of re-assessment proceedings noticed that the assessee had transferred one plot of land admeasuring 2008 sq. yds. situated at shekhpur Khanpur to the firm styled M/s. Siddharth Co. as his capital contribution and value of the said land determined at Rs. 2,41,000 stood credited to the assessee's account with the said firm. The original cost of the said land was Rs. 30,160. upto 14th March 1975 and that the said land was received by the assessee by way of gift from his father Ramanlal Gajjar. The ITO further found that the value of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of s. 2(47) of the Act and accordingly proposed that a sum of Rs. 2,10,840 be brought to tax as capital gains subject to statutory deductions. He then submitted the above proposition for the approval of the IAC under provisions of s. 144B of the Act who apart from the reasons set out by the ITO, relying on the decision in case of CIT vs. Kartikey V. Sarabhai (1981) 24 CTR (Guj) 184 : (1981) 131 ITR 42 (Guj) upheld the action of the ITO. 2. Being aggrived the assessee carried the matter in appeal before the CIT(A) contending in the first place that the ITO ought to have accepted the conversion of capital asset into stock-in-trade and as a consequence held that the said transaction had not resulted in any taxable capital gains. In sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal representative relying on the order of the ITO submitted that the conversion into stock in trade was a made believe affair and the contribution of alleged stock in trade into a firm was merely a devise. In this connection it was pointed out that Siddharth Co. comprised of three partners, the assessee. his son and his son's wife. Again the Act of conversion of stock in trade was merely supported by certain entries which are in nature of self serving statements. As a consequence according to the ld. departmental representative what was contributed in fact and truth was the capital asset which was exigible to capital gains in view of the decision in case on Sunil Siddharthbhai vs. CIT (1985) 49 CTR ((SC) 172 : (1985) 156 ITR 509 (SC). S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was carrying on business in timber. The affidavit was subject to cross examination. The assessee had developed the said land through the partnership by contruction of several flats which were sold and the profit thereform was offered for taxation by the firm. Thus there was a business carried on by the assessee through the firm and through the organisation of the firm. In this situation the act of conversion into stock-in-trade was rightly accepted by the CIT(A). It was also submitted that the decision in Sunil Siddharthbhai case has no application. That apart when the firm was accepted as genuine firm and the transactions undertaken by the said firm have not been challenged the observation in para 20 of the said judgment were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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