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2020 (7) TMI 134 - HC - Income TaxLong term capital gain - section 45(2) applicability - Property received by assessee on partial partition of Hindu Undivided Family - expenses claimed u/s 37(1) - Properties held as stock in trade by the joint family before they were allotted to the respondent on partition - substantial question of law involving in the case or not? - whether tribunal was correct in law in holding that the provisions of Section 45(2) and 49(1) of the Income Tax Act are not applicable in respect to the property received by assessee on partial partition of Hindu Undivided Family and thereby deleting the long term capital gain? - as per tribunal cost of the properties received in partial partition of HUF to be adopted as claimed by the assessee under Section 37 (1) of the Income Tax Act as deduction while computing the income under the head ‘Profit and Gains of Business or Profession’. HELD THAT:- From perusal of clause (iii) of memorandum of partition, it is axiomatic that asset, which were taken over were forming part of stock in trade of real estate business and continued to be in nature of stock in trade in the hands of the assessee. There is no iota of material on record to show that the assets obtained by the assessee were capital assets. The character of assets received on partition did not change and there is no provision in the Act to indicate that assets received on partition are capital assets, as no deeming provisions have been enacted by the Legislature. Section 45(2) of the Act are not applicable in the fact situation of the case as the asset received is stock in trade. Alternatively, it is worth noticing that there is nothing on record to indicate that any capital asset has been converted to stock in trade and provisions of Section 49(1) are not applicable to stock in trade. The definition of ‘capital asset’ in Section 2(14) expressly excludes stock in trade. The substantial questions of law framed by this court are in fact questions of fact and the findings on the questions involved in this appeal have been arrived at by the tribunal on the basis of meticulous appreciation of material on record. It is well settled in law that the tribunal is a fact finding authority and a decision on the facts of the tribunal can be gone into by the high court only if a question has been referred to it, which says that the finding of the tribunal is perverse. [SEE: ‘SUDARSHAN SILKS AND SAREES VS. CIT’[2008 (4) TMI 5 - SUPREME COURT] In ‘SANTOSH HAZARI VS. PURSHOTTHAM TIWARI’[2001 (2) TMI 131 - SUPREME COURT] while dealing with the expression ‘to be a question of law involving in the case’, there must be first a foundation for it laid in pleadings and the questions emerged from sustainable findings of fact arrived at by courts of fact and it must be necessary to decide that question of law for a just and proper decision of the case. In the instant case, it is pertinent to note that no factual foundation has been made in the pleading with regard to the findings of fact arrived at by the tribunal and no material has been placed on record to demonstrate that the findings of fact recorded by the tribunal are perverse. Therefore, the substantial question of law framed by a bench of this court in fact do not arise for consideration in this appeal as the matter is concluded by findings of fact. - Revenue Appeal dismissed.
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