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2017 (11) TMI 1811 - AT - Income TaxYear of taxability of capital gain u/s 45(2) - land was treated by the assessee as her stock-in-trade - assessee entered into the development agreement-cum-GPA - HELD THAT:- Assessee entered into a business agreement for development of her piece of land. The year in which conversion of capital asset into stock-in-trade has taken place is not known nor is it the year before us. Where any capital asset is converted in to stock-in-trade, the income would arise u/s 45(2) only in the year when the stock-in-trade is transferred/sold by the assessee. There is no doubt that during the relevant financial year, the assessee has entered into a development agreement only by contributing the land as her share of capital, while the developer was to invest in construction of the villas. The income would arise to the assessee only when the assessee sells her stock-in-trade but not when she contributes her stock-in-trade as her share of capital. Therefore, as rightly pointed out by the CIT(A), no gains have arisen to the assessee during the year by entering into the JDA dated 10-05-2012 with M/s. Ramky Estates & Farms Ltd., much less on accrual basis. Therefore, we see no reason to interfere with the order of the CIT(A) which is in consonance with the legal provisions on the issue. Accordingly, the grounds of the Revenue are dismissed.
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