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2008 (10) TMI 261 - AT - Income TaxLong-term or short-term capital gain (LTCG or STCG) - Sale of land - conversion of stock-in-trade into capital assets - Period of holding for the purpose of capital gain to include the period during with assets were held as stock in trade or not? - HELD THAT:- As rightly held by the AO as well as by the learned CIT(A), "capital asset" is defined in s. 2(14) as property of any kind held by the assessee whether or not connected with his business or profession, but the same does not include inter alia any stock-in-trade, consumable stores or raw materials held for the purpose of his business or profession. In the present case the property in question i.e., land was held by the assessee company upto 31st March, 2002 as the stock-in-trade for the purpose of its business and this being so, we are of the view that the period for which the said property was held by the assessee company as stock-in-trade of its business could not be reckoned for ascertaining as to whether it was a long-term capital asset or a short-term capital asset within the meaning given in ss. 2(29A) and 2(42A) as the same was not held by it as a capital asset. It is only when the same was converted by the assessee company into investment i.e., w.e.f. 1st April, 2002 that the same was held by it as capital asset and as the same was held by it for not more than 36 months immediately preceding the date of its transfer i.e., 12th Dec., 2002, it was a short-term capital asset as defined in s. 2(42A) and the capital gain arising from the sale thereof was chargeable to tax as 'short-term capital gain' as defined in s. 2(42B). In that view of the matter, we find no infirmity in the order of the ld CIT(A) upholding the action of the AO in treating the profit arising from the sale of the said property as short-term capital gain and upholding the same, we dismiss this appeal filed by the assessee. Appeal of the assessee is dismissed.
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