2014 (6) TMI 734

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.... that conversion of the closing stock being the unsold flats and offices into capital asset on the same book value, thereby generating no Income, does not qualify by any stretch of argument to be 'Business or Profession' in nature and further, it is seen that no business have been carried out by the assessee in the year under consideration as well as in subsequent years also, by itself the A. O. has rightly disallowed of business loss. (2)On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in directing to take the two receipts in respect of refund of excess Bank processing charges of Rs. 4, 87, 500/-and cessation of liability of Rs. 3, 15, 959/- u/s 41(1) of the I. T. Act 1961 under the head 'Income....

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....ot generate any income, that refund of processing charges and cessation of liability did not qualify to be held as business income, the rental income received by the assessee from the property, converted from stock-in-trade to capital asset, had been offered as income from house property, that loss claimed by the assessee under the head business and profession had to be disallowed. He issued a show cause notice to the assessee. Vide its letter dated 09. 12. 2010, assessee -firm argued that excess interest refund and cessation of liability were activities in nature of business/profession, that suspension of business could not be held as cessation of business. AO was of the opinion that expenses claimed to have been incurred by the assessee w....

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....rd the rival submissions and perused the material before us. We find that during the year under appeal the assessee had converted the stock in trade in to capital asset and the unsold flats and office premises became the capital asset of the assessee. Conversion was essentially sale of the assets and that is the reason we hold that the assessee was carrying on business in the year under consideration. From the record it is clear that conversion of stock in trade was not at market value. But, for that reason we cannot hold the view that there was no business in the year. FAA was justified in holding that the assessee had carried out business during the year. In these circumstances, we are of the opinion, that business loss claimed by the ass....