Case Law Details
Shri Rameshchandra Chhabildas Vs JCIT (ITAT Surat)
n the present case, the assessee has converted his stock-in trade in to capital asset and sold out the said asset after its conversion, the gains arising therefrom is therefore, required to be taxed as long-term capital gain and not as business income as held by the AO. Since the assessee has re-converted the stock-in trade in to capital asset as on 01.04.2010, we find that the there is no bar in law for re-conversion of business assets into capital asset and vice versa. No judicial pronouncement has been cited before us to controvert this view. Since the asset in question sold has been considered as capital asset in the books of accounts, which are the evidence on record in form of book entries to substantiate the facts unless proved otherwise. Therefore, we are of the considered view that when the capital asset is sold, the gains from which will be assessable as long-term capital gain. We do not find any merit in the view of CIT (A) that holding period for capital asset should be counted during the duration when it was held as capital asset. In our considered view, it is the period for which the assets is held by the assessee and its title is not relevant to determine the period of holding. As we have already discussed above that as per definition as given in section 2 (42A) of the Act, according to which, the holding period as owner of asset is to be considered for computation of period for the purpose of capital gains u/s. 45 of the Act. In view of these facts and circumstances, we are of the considered opinion that the land in question is to be treated as long term capital asset for the purpose of computation of long-term capital gain and is required to be taxed and assessed as long-term capital gain.
We, therefore, modify the order of lower authorities and hold that surplus arising of Rs.1,62,67,160/-is as long-term capital gain and be assessed accordingly. Consequently, the assessee will be entitled to set-off of brought forward long-term capital loss of Rs.16,40,564/-. Accordingly, we direct the AO to allow deduction on account of indexation after verification of records. In view of these facts and circumstances, all the grounds of appeal raised by the assessee are allowed.
FULL TEXT OF THE ITAT JUDGEMENT
1. This appeal by the Assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-4, Surat (in short “the CIT (A)”) dated 21.01.2016 pertaining to Assessment Year 2011-12, which in turn has arisen from the order passed by the Joint Commissioner of Income-tax, Range-5, Surat (in short “the AO”) dated 28.02.2014 under section 143 (3) of Income Tax Act, 1961 (in short ‘the Act’).
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