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2022 (1) TMI 243 - AT - Income TaxCapital gain - Conversion of capital asset into stock in trade - FMV determination - AO has adopted about ₹ 100/- per sq.ft as fair market value of the property as on date of conversion and such rate was determined on the basis of guideline value of property, when the assessee has subsequently sold plots after conversion of capital asset into stock in trade - HELD THAT:- No doubt, guideline value of property may not be a sound indicator for determining fair market value of the property. It is an admitted fact that there is large difference between guideline value and fair market value of property. Therefore, one cannot go by guideline value of property to determine fair market value of the property, including for the purpose of conversion of capital asset into stock in trade. To this extent reasons given by the Assessing Officer to adopt fair market value of the property at the time of conversion of capital asset into stock in trade at ₹ 100/- cannot be sustained. Similarly, valuation of closing stock by adopting guideline value as on 31.03.2012 also cannot be accepted. However, fact remains that the assessee has also not able to justify adoption of fair market value at ₹ 250/- per sq.ft at the time of conversion of capital asset into stock in trade. Therefore, considering fact that both the parties have failed to justify respective rates adopted for conversion of capital asset into stock in trade, we deem it appropriate to adopt a sum of ₹ 200/- per sq.ft as fair market value of the property as on date of conversion of capital asset into stock in trade to settle dispute between the parties. Hence, we direct the Assessing Officer to adopt a sum of ₹ 200/- per sq.ft. as fair market value of the property and rework gross profit, if any, to be considered for taxation. Appeal filled by assessee is partly allowed.
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