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2015 (5) TMI 1114 - AT - Income TaxCapital gain on conversion of land as stock in trade - business income treatment - Held that:- The land was to be treated as capital asset upto conversion of it into stock in trade and the assessee is liable for capital gain on conversion of it as stock in trade and provisions of section 45(2) is applicable and after this when the land was actually sold, the income arising from sale to be considered as “Business Income” which is to be assessed in this assessment year. As the Assessing Officer computed the entire sale consideration under the head” business income”, he did not apply the provisions of sec.45(2) of the Act, which is not proper. In view of this, we direct the AO to compute the capital gains upto the date of conversion into stock in trade by applying provisions of section 45(2) of act and thereafter, on actual sale of the land i.e. difference between the value of sale and stock in trade to be considered as” business income” and to be assessed in this assessment year, accordingly. Appeal of the assessee is partly allowed.
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