TaxTMI 
TaxTMI 
2023 (8) TMI 1190
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appeal. 2. Assessee is an individual and also the Director of M/s. Prime Estate Developers and Builders P. Ltd., and a partner in M/s. Celebrity Prime Developers. For the assessment year 2016-17, he filed the return of income on 04/10/2016, declaring an income of Rs. 74,07,630/-. Learned Assessing Officer found that the assessee sold stock in trade comprising of plots and land purchased by him and claimed exemption under section 54F of the Income Tax Act, 1961 (for short "the Act"). learned Assessing Officer further found that from the explanation of the assessee, that the assessee acquired agricultural land by way of gift from his father, converted the same to stock in trade in the financial year 2012-13, divided into the plots and put....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ck in trade, the Fair Market Value on the date of conversion will be deemed as the consideration arising from such conversion and the capital gains are to be taxed in the previous year in which the capital asset was sold. According to the assessee before the learned CIT(A), by reckoning the consideration with reference to the Fair Market Value of the asset in the year of conversion, capital gains were computed in the previous year in which the plots were sold. 5. Learned CIT(A) accepted the contention of the assessee and allowed the exemption under section 54F of the Act accordingly. Revenue is, therefore, aggrieved and filed this appeal contending that the assessee is engaged in the trading activity of purchase and sale of lands, conver....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r himself allowed the benefit under section 54F of the Act. 7. We have gone through the record in the light of the submissions made on either side. on a careful reading of the papers including the submissions made by the counsel on either side, the undisputed facts are that,- assessee acquired 6.55 acres of land on 11/10/2004 and it was converted into stock in trade to be introduced to the partnership firm. This alone is the property that is converted from agricultural land to plots to be introduced as stock in trade of the partnership firm. This alone is in dispute in this case. Though the assessee sold two more plots one at Hosur and other at Gafoornagar villages, there is no dispute and the learned Assessing Officer himself accepted t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the sale consideration on the sale of plots which were converted from out of the agricultural land to stock in trade, the same has to be treated as 'business income' and not as 'capital gains' because the activities of the assessee were resembling the 'adventure in the nature of trade', but by way of additional grounds, the Revenue has taken a plea that such income derived by the assessee on the conversion of the plots constitutes capital gains and on the sale of such plots the assessee would be entitled to exemption under section 54F of the Act only to the extent of the Fair Market Value of such plots as on the date of conversion and nothing more. 11. In the chart furnished by the learned AR, it is clearly shown that though the sale p....