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2016 (12) TMI 951 - AT - Income TaxRevision u/s 263 - sale of land - AO treated sale as business receipt - The records shows that the assessee had purchased the land measuring 61,500 Sq. meter. The magnitude was so much that it cannot be for capital investment. The assessee got the land use conversion from agriculture to residential and paid the necessary fee to the concerned authorities. Since the acquisition of the said land and converting the same into residential was shown in the accounts as stock in trade which is evident from the financial statements available in the paper book as submitted before the AO. Further it is seen that ld. Pr.CIT- 1 has also observed the fact that as on 1-4-2009 the land was disclosed as opening stock for F.Y. 2009-10 i.e. relevant to AY 2010-11. The issue before us is for AY 2011-12. Thus in the previous year relevant to the assessment year before us the subject land was business asset of the assessee. The ld. Pr.CIT-1 has also ignored this fact. This issue has been examined by the AO and assessee had made submission during the course of assessment proceedings. These details are available in the paper book. The AO after examining these details and after going through these financial statements proceeded to complete the assessment by accepting the business profit declared by the assessee. The assessee has been able to demonstrate that the land sold during the assessment year was the business asset (stock in trade) in the financial statements and duly appearing in the return of income filed. The AO accepted the contentions of the assessee and adopted a view. Now Pr. CIT does not agree with the view adopted by the AO then the law does not permit him to replace the view. Thus in our considered view the ld. Pr.CIT-1 is not justified to set aside the order of the AO. Date of conversion of the investment in the subject land to the stock in trade - Held that:- As established that there was no loss to revenue if the provisions of section 45(2) are applied and deemed capital gains as on the date of conversion of investment into stock in trade was computed. Further business profit is computed in the impugned year when actual sale takes place by taking the fair market value as on the date of such conversion as cost of acquisition. This view is duly supported by the order of the Hon’ble Apex court in the case of CIT v. Max India Ltd.,(2007 (11) TMI 12 - Supreme Court of India ) wherein it has been held that ‘every loss of revenue cannot be said to be prejudicial to the interests of revenue’. As observed above in the present case , there has been no loss to the revenue and it cannot be said that the order passed by the AO was prejudicial to the interest of revenue - Decided in favour of assessee
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