9911796707
TMI Blog2016 (1) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... are common, we narrate the facts of assessment year 2008-09 in I.T.A.No. 1276/Mds/2011. 3. The facts of the case are that the assessee is Private Limited Company engaged in the business of dealing in cars in the name and style of MPL Cars Pvt. Ltd. The assessee's main business is dealership of Ford Vehicles and servicing thereof. This business of dealing in cars is carried on by the assessee since 1999 and continued till date. The assessee had a service centre at 23/1, B-3, Tambaram Velachery Main Road, Pallikaranai and the land and building of which was acquired by the assessee company in 1999 at the time of demerger of MPL Parts & Services Pvt. Ltd. by means of a transfer deed duly registered on 03.11.1999. During the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, the Company' intention to explore the property for business purpose is established by the very fact the the preliminary work started in the year 2005, an agreement with a Project Engineer was also entered into in the said year 2005 in terms of which the Project Engineer was to be allotted a certain amount of built-up area and car parking area free of cost, proving the fact that the appellant had plan to develop the land, construct an IT Park and sell the same in order to make hay while the real estate sector was in a boom which is nothing but a business activity. 6) Even before the sale of the IT Park-I in the year 2008 the appellant had not only constructed IT Park-II known as MPL Silicon Towers, but had entered into Develop Agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as income from business." 6. We have heard both the parties and perused the material on record. In this case, the assessee acquired the said property in the year 1999. According to the assessee's counsel, during the assessment year 2008-09, the assessee sold the building IT Park-I and the income generated from the sale has to be considered as income from capital gains. The assessee-company during the year 2004, that in view of the blooming real estate market and need for Information Technology sector, decided to shift the workshop and service center to a rented premises and construct an IT Park. The assessee has shown the construction of the building as capital workin- progress and the project expenses as direct expenses. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, upto 2005, the asset should be considered as fixed asset and provisions of sec. 45(2) to be applied for the purpose of determining the income. Sec. 45(2) of the Act deals with conversion by owner of a capital asset into stock-in-trade which generates profits or gains. These profits and gains are taxable in the assessment year in which the said stock-in-trade or the business asset is sold. Date of conversion is treated as the date of transfer for the purpose of sec. 48 of the Act. Full value of consideration is the fair market value of the said capital asset on the said date of conversion. The above provision provided for the computation and it is done in two steps. Firstly market value as on the date of the conversion has to be ascertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not business. This is not based on any sound principles. The assessee has converted the property as stock-in-trade in the year 2005 when it entered into an agreement with Project Engineer and from that date onwards the assessee's landed property is to be considered as stock-in-trade and income generated from the transfer thereafter has to be considered as business income only. To that extent, we remit this issue to the file of the Assessing Officer for re-computation of income as indicated above. Accordingly, both the appeals of the Revenue are allowed for statistical purposes.
8. In the result, both the appeals of the Revenue are allowed for statistical purposes.
Order pronounced in the open court on 8.1.2016. X X X X Extracts X X X X X X X X Extracts X X X X
|
