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TMI Blog2002 (12) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it had started business in real estate by converting part of its vacant land into stock-in-trade to carry on the business of real estate. In order to prove the same, it was contended that a resolution to that effect was passed on January 1, 1981, and entries have been made in the books of account. It was also claimed that the proceedings of the resolution was recorded in the minutes, duly signed by the chairman, that the minutes so recorded were filed with the Registrar of Companies on January 11, 1983, that as per the entries made in the books of account, the property alleged to have been converted into stock-in-trade was valued at the market value of Rs. 35,90,000 and recorded in the books of account. It was also claimed that during the relevant previous year an extent of 3.58 acres of land was sold for the gross receipts of Rs. 9,15,790 and a sum of Rs. 10,24,260 claimed as business loss. Pending the assessment proceedings before the Assessing Officer, the assessee made an application to the Inspecting Assistant Commissioner under section 144A for appropriate direction. The Inspecting Assistant Commissioner after hearing the assessee declined to give any direction as request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no question or possibility for the assessee converting the same into stock-in-trade. The Tribunal further found that the alleged conversion of the land into stock-in-trade was not genuine. The Tribunal also rejected the minutes projected by the assessee in order to prove the conversion on the ground that the minutes so produced had been entered on a loose sheet of paper and it is only an afterthought to avoid the liability of capital gains. The alternative claim of the assessee that part of the consideration had gone into discharging the mortgage debt and therefore to that extent, the consideration paid by the purchaser, which went into discharging mortgage debt has to be allowed as a deduction while computing the capital gain, has also been rejected by the Tribunal on the ground that there was absolutely no evidence to show that any consideration had gone into discharging the mortgage debt and on the contrary found that the properties sold under the various sale deeds were got released from the mortgage and then the sale deeds were executed. As against the order of Tribunal, the above reference was made. It is the contention of learned counsel for the assessee that by r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rman of the next succeeding meeting. In the case of minutes of the proceedings of the general meeting by the chairman of the same meeting within the aforesaid period of thirty days or in the event of the death or inability of that chairman within that period by a director duly authorised by the board for that purpose. In no case, the minutes of the proceedings of the meeting shall be attached to any such book as aforesaid by pasting or otherwise. The minutes of each meeting shall contain a fair and correct summary of the proceedings. Hence, the Tribunal has recorded a finding that in view of the express provision under section 193 of the Companies Act, the minutes dated January 1, 1981, produced in a loose sheet cannot be accepted. Even the Assessing Officer has given a finding that in spite of the opportunity given to the assessee, the minutes book was not produced. When the Inspector visited the business premises of the assessee on December 29, 1984, on the basis of an authorisation under section 133A, the chairman informed the Inspector that the resolutions were typed in loose sheets and kept with various other papers and it would take time to trace and locate the same. Ultimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old in terms of plots, but in terms of extent over an extent of 357.74 cents. It is also found by the Tribunal that the assessee was not in possession of the land, which was sold during the relevant previous year. All those lands were sold under various agreements of sale and the purchasers were given possession in the years 1969 and 1970 itself. This factual position clinches the issue when the assessee was not in actual possession of the properties and the properties were given in possession to the agreement holders in the years 1969 and 1970 itself, there was no question of converting the land into stock-in-trade by passing a resolution in the year 1981. Learned counsel for the assessee contended that even if the minutes produced by the assessee are ignored, the account books are sufficient to show that the land has been converted into stock-in-trade. In so far as the accounts are concerned for the assessment year ended March 31, 1981, the chartered accountant signed the balance-sheet subsequently on January 15, 1982, and it was filed before the Income-tax Officer in May, 1982, and the Tribunal therefore recorded a finding that the action of the assessee is in conformity with i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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