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2018 (3) TMI 1210 - HC - Income TaxComputation of profit - sale of asset after conversion from capital asset to stock-in-trade - Treatment to sale considerations - capital gain or business income - Held that:- In view of the undisputed facts being similar, and taking note of the decision of the Hon'ble Division Bench of this Court in Commissioner of Income Tax Vs. Essorpe Holding Pvt. Ltd. [2017 (6) TMI 1157 - MADRAS HIGH COURT] wherein held as 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. In the impugned order, HC directed the AO 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. Substantial questions of law framed in the instant tax appeal for the assessment year 2009-10, are answered against the Revenue.
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