TaxTMI 
TaxTMI 
2018 (8) TMI 1938
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....T (A) has erred in law and on facts in confirming the action of the learned AO of treating the surplus arising on sale of impugned land of Rs. 1, 62, 67, 160 as business income instead of long-term capital gain. 3.The ld. CIT (A) has erred in law and on facts in confirming the action of the learned AO of treating the asset transferred during the year by the appellant being land to be the short-term asset, though held for more than a period of 36 months by the appellant. 4. The ld. CIT (A) has erred in law and on facts in confirming the action of the learned AO of not granting the indexation of the cost of capital asset being land transferred by the appellant during the year. 5.The ld. CIT (A) has erred in law and on facts in confirming the action of the learned AO of rejecting the claim of set off of the appellant of brought forward long-term capital loss of Rs. 16, 40, 564 against the longterm capital gain earned by the appellant on transfer of capital asset being land." 3. Since the above ground Nos.1 to 6 of appeal are interconnected and the key issue is involved is treating the longterm capital assets as business asset and long-term capital gain as....
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.... these were sold on 05.04.2005, 19.04.2005, 20.04.2005 and 26.04.2005 i.e. within period of 26 days after classifying the said assets as capital asset, whereas in the case of assessee, he has sold capital asset after 5/12 months after classifying the capital asset. In lucid contrast, the assessee immediately after purchase of plot of land in financial year 2005-06 and accounted for the said capital asset in the books of accounts as on 31.03.2006, 31.03.2007 and 31.03.2008 as capital asset and not as a stock-in-trade. The learned A. R has also submitted that the AO has denied the benefit of indexation, whereas there is no provision in the Act, even if the asset is held as business asset or capital asset to deny the indexation. The ld. A.R. further submitted that the AO has also denied benefit of set-off of long-term capital loss of Rs. 16,40,564/-. The learned A.R. relying on the decision in the case of CIT v. Rama Rani Kalia (2013) 358 ITR 499 (All) and A. Suresh Rao v. ITO [2013] 157 TTJ 753 (Bang) submitted that while classifying an asset as capital asset, the total period of holding of the concerned asset by the assessee should be taken into consideration and nature of title ....
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....01.04.2010 to 16.09.2010. However, the assessee has held this as capital assets from 03.12.2005 to 16.09.2010. Therefore, the holding period of this asset by the assessee is more than 36 months, even though the nomenclature or title given by the assessee may be capital asset or a stock in trade. As per the definition given in section 2 (42A) of the Act. The short-term capital assets is to mean a capital asset held by an assessee for not more than 36 months. This section does not recognizes the nature of asset, whether it is capital or is as a depreciable asset as that expression used in this section is "held by the assessee" and does not say whether it is an investment or as stock in trade. Reverting to the facts of the present case, we find that the land in question was held for the period from 03. 12. 2005 to 16. 09. 2010 by the assessee, being legal owner of the asset under consideration. Therefore, as per the definition of section 2 (42A) of the Act, the underlying asset held by the assessee was land which was held for more than 36 months and the title or treatment given by the assessee in books of accounts is immaterial so far the holding period of this asset is concerned. Thi....
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....rofits and gains on transfer of the asset. The Supreme Court in the case of Sir Kikabhai Premchand v. CIT [1953] 240 ITR 506 and further the Calcutta High Court in the case of CIT v. Dhanuka & Sons [1980] 124 ITR 24 [1979] 1 Taxman 417 had taken the view that there cannot be an actual profit or loss of such transfer when no third party is involved and the items are kept in a different account of the assessee himself. The question of gain or loss would arise only in future when the stock transferred to the investment account might be dealt with by the assessee. If such shares be disposed of at a value other than the value at which it was transferred from the business stock, the question of capital loss or capital gain would arise. In the absence of a specific provision to deal with the present situation, two formulas can be evolved to work out the profits and gains on transfer of the assets. One formula which had been adopted by the Assessing Officer, i.e., difference between the book value of the shares and the market value of the shares on the date of conversion should be taken as a business income and the difference between the sale price of the shares and the market value of the....