Asset cannot be said to be held as stock-in-trade in absence of evidence proving the same

Ranjit Shivram Raut Vs ITO (ITAT Mumbai)

ITAT Mumbai held that mere presumption that plots are intended for further sale and hence plots were stock-in-trade doesn’t make the claim satisfying as the assessee failed to prove the same by way of evidences.

Facts- During assessment proceeding, AO observed that as per the Annual Information Return (AIR) the assessee purchased three plots of land for total consideration of ₹9 lakh (₹3 lakh for each plot) against the fair market value of ₹1,70,91,000/-(₹56,97,000/- for each plot).

According to AO, the difference amount of ₹1,61,91,000/- was taxable u/s. 56(2)(vii)(b) of the Act . The contention of the assessee that Section 56(2)(vii)(b) of the Act was not applicable being plots purchased were not capital asset, was rejected by AO.

AO made reference to Departmental Valuation Officer for ascertaining the FMV of the properties as per proviso to section 56(2)(vii)(b) of the Act. Till the finalization of the assessment, valuation report was not received from the Departmental Valuation Officer and therefore AO assessed the difference between the value of the properties as per stamp duty authorities and value declared by the assessee in the registered agreement, amounting to ₹1,61,91,000/- in assessment order.

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