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2017 (6) TMI 1157 - MADRAS HIGH COURTTreatment to sale considerations - capital gain or business income - Held that:- Decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax vs. Groz-Beckert Saboo Ltd. (1978 (11) TMI 2 - SUPREME Court) wherein an assessee converts his capital assets into stock-in-trade and starts dealing in them, the taxable profit on the sale must be determined by deducting from the sale proceeds the market value at the date of their conversion into stock-in-trade and not the original cost of the assessee. As in the case of M/s. Essorpe Mills Ltd. and M/s. Essorpe Holdings Pvt. Ltd Versus DCIT [2013 (7) TMI 996 - ITAT CHENNAI] wherein the revenue has accepted the sale of 50% of the same property by the Essorpe Holdings Pvt. Ltd., to an extent of 5.075 acres of land for the assessment year 2009-10, directing the Assessing Officer to apply the provisions of Section 45(2) of the Act and compute the capital gains upto to the date of conversion into stock in trade, and thereafter on actual sale of the land i.e. the difference between the value of sale and stock in trade to be considered as business income.
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