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2012 (10) TMI 363 - HC - Income TaxComputation of capital gain - treatment of conversion of asset into stock-in-trade and realization of profits was not acceptable - Held that:- Revenue have applied the principles of law and have arrived at the finding that the land in urban area for which the Zamindari was abolished on 1.7.1961 was partly inherited by the assessee from his father. The remaining part was purchased by him by sale deeds dated 16.12.1958 and 16.5.1959. The assessee along with his co-partners had filed suit for declaration, which was decreed on 5.6.1968. The sons of Shri Narain Rao Sapre had filed suits for cancellation of sale deeds and for possession. The suit was decreed cancelling the sale deed to the extent of 2/3rd share but claim for possession was not allowed. In the circumstances, the stand taken by the assessee that the property was inherited as H.U.F., was rightly disbelieved. No agricultural operations were carried on - the assessee had evened out the land with the help of tractor and had sold the plot after leaving the roads and drainage system and thus in view of the provisions of Section 45 (2) of the Act the profits and gains arising out of transfer by way of conversion by the owner of capital asset into, or its treatment by him as stock-in-trade of business carried on by him is for and from the assessment year 1985-86 be charged to tax under the head capital gains in the previous year in which such stock-in-trade is sold or otherwise transferred by him. The income tax authorities committed no error in applying Section 45 (2) for the purposes of assessment and by adopting a notional value for the purposes of fixing the price for land as on 1.4.1974 for stamp duty for working out business income from the sale of land and applying the depreciated value by 10% of every year for the purposes of arriving at value in the year 1984 - against assessee.
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