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2016 (3) TMI 742 - AT - Income TaxAssessment of capital gains on sale of 5.075 Acres of land - Held that:- The property in question was given as security to M/s Globus Realtors Pvt. Ltd. for advancing loan to the sister concern M/s Essorpe Holdings Pvt. Ltd. Therefore, it is obvious that to promote the business of sister concern, M/s Essorpe Holdings Pvt. Ltd, the assessee gave the land in question as security. While giving the security, the assessee has also executed power of attorney in favour Shri V. Sivakumar, Managing Director of M/s Globus Realtors Pvt. Ltd. When the sister concern could not repay the loan amount, the property which was given as security was sold by Shri V. Sivakumar and the sale consideration was adjusted for repayment of the loan by M/s Essorpe Holdings Pvt. Ltd. In those circumstances, this Tribunal is of the considered opinion that since the land was given as security for commercial expediency to sister concern, there was a business loss arising in the course of business. Since no amount was realized and the assessee-company suffered a loss for giving security to the sister concern, the same has to be allowed as business loss while computing the taxable income. In view of the above, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are modified and the Assessing Officer is directed to compute the capital gains u/s 45(2) of the Act on sale of land upto the date of conversion as stock-in-trade. The profit on sale of land as stock-in-trade has to be computed as business loss since the assessee has not received any money on sale of the land. Therefore, the capital gains computed upto the date of conversion of land into stock-in-trade has to be set off against the business loss computed on sale of the stock-in-trade. - Decided in favour of assessee
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