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2023 (1) TMI 665 - ITAT CHENNAICorrect head of income - Profit or loss derived from sale of land - ‘capital gains’ OR ‘income from business or profession’ - HELD THAT:- Assessee was in the business of construction and real estate development. It was also not in dispute that the assessee had held the impugned land sold for the AY 2003-04 as stockin- trade in the books of accounts for the earlier assessment years. Although, the assessee claims to have converted stock-in-trade into investment for the AY 2002-03, but no evidence has been furnished before us to justify its case in light of provisions of Sec.45(2) - assessee has held many lands and classified as stock-in-trade. Therefore it is very clear that the assessee was acquired the impugned land held for the AY 2003-04, for the purpose of commercial exploitation and further, the conduct of the assessee, including accounting in the books of accounts is also supports the case of the AO that the impugned land was held as stock-in-trade. Therefore, in our considered view, profit or loss derived from sale of land held as stock-in-trade is assessable under the head ‘income from business or profession’ as assessed by the AO, but not assessable under the head ‘capital gains’ as claimed by the assessee. Although, the assessee claims to have converted stock-in-trade into investment, but there is no evidence with the assessee to prove its case in light of provisions of Sec.45(2) because the assessee has not satisfied the conditions prescribed therein and also computed business profits towards conversion of stock-in-trade into capital assets. Assessee has computed profit or loss derived from sale of land under the head ‘capital gains’ to derive the benefit of indexation, otherwise, all evidences including accounting system clearly suggest that impugned land sold by the assessee was stock-in-trade and profit or loss derived from sale of said land is assessable under the head ‘income from business or profession’. There is no error in the reasons given by the AO as well as the Ld.CIT(A) to assess profit or loss derived from sale of land under the head ‘income from business or profession’ and thus, we are inclined to uphold the findings of the Ld.CIT(A) and dismiss the appeal filed by the assessee.
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