Court dismisses revenue's appeal, upholds ITAT order for assessment year 2000-01. No capital gain due to factory land conversion.

The court dismissed the revenue's appeal challenging the ITAT's order for the assessment year 2000-01. It was held that no capital gain arose as there was no transfer of the factory land in 2000-01, as confirmed by the CIT(A) and the Tribunal. Additionally, the court upheld the conversion of the factory land into stock-in-trade for real estate development in 1992, based on established facts and actions taken by the respondent. The revenue's contentions were rejected, and the court found no reason to dispute the conversion date of 1992.

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Issues:
1. Whether no capital gain will arise in the concerned assessment year due to the restriction on selling the factory land.
2. Whether the factory land was converted into stock-in-trade in 1992 for real estate development.

Analysis:

Regarding Question (a)
The respondent, an assessee engaged in manufacturing ceramic tiles, faced a lockout in 1989 and was later restrained from selling the factory land by an Industrial Court and subsequently by the High Court due to disputes with a construction company. In 1999, a joint development agreement was entered into with a developer. The Assessing Officer claimed that the land was transferred in 2000-01, triggering capital gain tax. However, the CIT(A) and the Tribunal held that no transfer occurred as no possession or construction activity took place, and the amounts received were deemed advances subject to certain obligations. The court found no transfer took place in 2000-01, as confirmed by the CIT(A) and the Tribunal, dismissing the revenue's claim.

Regarding Question (b)
In 1992, the respondent decided to convert the factory land into stock-in-trade for real estate development, obtaining necessary permissions over the years. The Assessing Officer disputed this conversion due to lack of activity on the land. The CIT(A) and the Tribunal, considering the actions taken by the respondent since 1992, concluded that the land was converted into stock-in-trade in 1992. The revenue contended that the 1992 resolutions were merely procedural. The court upheld the findings of the CIT(A) and the Tribunal, stating that the conversion occurred in 1992 based on the established facts, and found no reason to challenge this conclusion.

In conclusion, the appeal by the revenue challenging the ITAT's order related to the assessment year 2000-01 was dismissed, with no costs awarded.

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