Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2017 (4) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (4) TMI 300 - HC - Income TaxConversion of the trading shares into investment shares - treating the long term capital gain arising from the sale of those shares as profit of trading in shares and bringing the same to tax - Held that:- Section 45(2) of the Act provides for conversion by the owner of a capital asset into or its treatment by him as stock-in-trade of a business carried on by him as chargeable to income-tax as income of his previous year in which such stock-in-trade is sold or otherwise transferred by him and fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of a capital asset. The Act however does not provide for the conversion of stock-in-trade into capital asset. In Dhanuka & Sons (1978 (7) TMI 22 - CALCUTTA High Court) the same situation was contemplated where on stock transferred in investment account, the question of capital loss or capital gain, was held, would arise if such shares be disposed of at a value other than the value at which it was transferred from the business stock. We, on noticing that the Tribunal did not really hold otherwise but had held against the assessee on the point of resjudicata, had formulated the above question. Nevertheless for the reasons aforesaid we answer the question suggested by the assessee in the affirmative and in its favour. In that regard the said circular dated 29th February, 2016 has no application because the assessee’s stand was not accepted by the Revenue - Decided in favour of the assessee.
|