Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2012 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (11) TMI 713 - AT - Income TaxConversion of investments into stock in trade - Capital gain v/s Business income - reopening of assessment - Held that:- The provisions of section 45(2) cannot be made inapplicable to the instant case merely for the reason that the assessee, the owner of the capital asset, has neither converted into nor treated the impugned investment as the stock in trade voluntarily. In denial of the same to the assessee, the Revenue authorities have adopted the principle of ‘literal interpretation’ which must not have been done by the revenue in order to avoid the absurdity of interpretation as in view of the ratio of the Apex Court in the case of K P Verghese [1981 (9) TMI 1 - SUPREME COURT]. Therefore, AO is duty bound to make the assessment in accordance with the provisions of the Act including the provisions of section 45(2). Date of conversion for the shares sold in AY 2006-07 - Held that:- It is trite law that every assessment year is an unit of an assessment. Any transaction can be accounted by applying accounting entries, arriving at the cost of acquisition of shares or market price or their fair market value is not impossible considering the availability of material on record. So far as the capital gain relatable to the capital asset so converted for the assessment year 2006-07, 1.4.2005 has to be taken as the date of conversion, which cannot be altered in respect of the capital assets sold in the relevant previous year. If any other assets are sold in the preceding assessment year 2005-06, assessment for which is allegedly reopened, about which there is no clarity before us, the date of conversion would be 1.4.2004. As there is need for data for determining the assessable capital gains upto the date of conversion and the business income upto the date of sale of the impugned capital asset for arriving at proper taxable ‘capital gains’ and the ‘business income’ within the meaning of the said provisions restore the matter to the file of the AO for computation - partly in favour of assessee.
|