AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 630
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....sessee has paid MMD plan submission charges of Rs. 15,300/- in the same assessment year and hence the AO was of the view that the assessee was continuing the real estate business in the AY 1995-96 also and the character of the asset continued to be stock in trade despite the book entries passed. Accordingly the AO assessed the entire income as business income against the long term capital gains claimed by the assessee amounting to Rs. 1,88,171/-. The matter travelled up to ITAT and the Co-ordinate Bench of ITAT 'A' Bench, Chennai, in ITA No. 2317/Mds/03 dated 20.10.2006 set aside the Order of the AO with a direction to decide the issue de novo. In the second round, the AO has passed Order u/s. 143(3) r/w Sec.254 of Income Tax Act on a total income of Rs. 6,17,353/-. In the second round, the AO held that the assets is continued to be stock in trade till FY 1996-97, therefore, rejected the indexation benefit to the assessee. 3. The assessee went on appeal before the Ld. CIT (A) and the Ld. CIT (A) rejected the assessee's contentions regarding long term capital loss and held that the sale transaction represents short term capital gains. 4. Aggrieved by the Order of the L....
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...., though held as stock in trade and sold in the FY 1997-98 the holding period was more than 36 months and the Ld.AR contended that the assets should be treated as capital assets and indexation required to be allowed from the date of acquiring the assets since there was no change in the character of the property. The Ld.AR also relied on the decision of this Bench in the case of Vinay Sawhney v. ITO [IT Appeal No. 993 (Mds.) of 2015, dated 19-2-2016], wherein the Co-ordinate Bench came to conclusion that the first date of acquisition has to be adopted as date of acquisition of the asset. The Co-ordinate Bench in the case cited supra placed reliance on the decision of the Pune Bench of this Tribunal in Kalyani Exports & Investments (P.) Ltd./Jannhavi Investments (P.) Ltd. Rajgad Trading (P.) Ltd. v. Dy. CIT [2001] 78 ITD 95 (Pune) (TM). 6. We have considered the rival submissions and perused the material on record. The question which arises and needs an answer is "what would be the period of holding of the asset-whether it would relate back to the date when (personal) capital asset was converted in to business asset a few years back or the date of conversion now from business asset ....
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....tral Government ; 2. Section 2 (29A)- "long-term capital asset" means a capital asset which is not a short-term capital asset ; 3. Section 2 (42A)- (42A) "short-term capital asset" means a capital asset held by an assessee for not more than thirty-six months immediately preceding the date of its transfer : Provided that in the case of a share held in a company or any other security listed in a recognised stock exchange in India or a unit of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or a unit of a Mutual Fund specified under clause (23D) of section 10 65or a zero coupon bond, the provisions of this clause shall have effect as if for the words "thirty-six months", the words "twelve months" had been substituted : Explanation 1.- (i) In determining the period for which any capital asset is held by the assessee- (a) in the case of a share held in a company in liquidation, there shall be excluded the period subsequent to the date on which the company goes into liquidation ; (b) in the case of a capital asset which becomes the property of the assessee in the circumstances mentioned in sub-section (1) of section 49, there shall be inc....
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....ecognised stock exchange in India immediately prior to such demutualisation or corporatisation ; (hb) in the case of a capital asset, being any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer free of cost or at concessional rate to his employees (including former employee or employees), the period shall be reckoned from the date of allotment or transfer of such specified security or sweat equity shares ; (ii) in respect of capital assets other than those mentioned in clause (i), the period for which any capital asset is held by the assessee shall be determined subject to any rules which the Board may make in this behalf : Explanation 2.- For the purposes of this clause, the expression "security" shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) ; Explanation 3.- For the purposes of this clause, the expressions "specified security" and "sweat equity shares" shall have the meaning respectively assigned to them in the Explanation to clause (d) of sub-section (1) of section 115WB; 4. Section 45(2)- Notwithstanding anything contained in sub-sect....
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....r profession. The property in question which was held by the assessee as stock-in-trade could not be regarded as a capital asset up to 31-03-2002 and it became a capital asset only on 01-04-2002 when the same was converted from stock-in-trade into investment. The assessing officer relied on the decision of the Bombay High Court in the case of CIT v. Santosh L. Chowgule [1998] 234 ITR 787 wherein it was held that it is only "the life of the converted asset (being share in this case) have to be (re)considered in reckoning whether it is a short-term or long term capital asset. Reliance was also placed by the assessing officer on CIT v. Chunilal Khushaldas [1974] 93 ITR 369 (Guj.) and Executive of the Will of Late Shri Manecklal Premchand v. CIT [1990] 186 ITR 554 (Bom.) wherein it was held that bonus shares are acquired by a shareholder when they are issued and they must be taken to be held by the shareholder from the date of their issue and not from the date when the original shares in respect of which they are issued were acquired by the assessee The Tribunal endorsed the views of the assessing officer. In the case before the Gujarat High Court in Chunilal Khushaldas (supra) bonus s....