TaxTMI 
TaxTMI 
2025 (6) TMI 1748
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.... having same facts and circumstances, we are deciding these appeals by way of this consolidated order. 2. Brief facts as coming out from the order of the authorities below are that a search & seizure action was conducted in the case of M/s. Brigade Enterprise Ltd. on 02.11.2017. During the course of search, certain incriminating documents in the form of Joint Development Agreements (JDAs), sale deeds etc, were found and seized. The A.O. of the searched person observed that these documents were pertaining to the present assessees, therefore, action u/s 153C of the Income Tax Act, 1961 (in short "The Act") has been taken in the case of the assessees. Accordingly, notice u/s 153C of the Act have been issued to both the assessees on 24.3.202....
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....79938.89 sq.ft of complete built up area with all necessary approvals and occupation certificate to the assessee firm and there exists a difference in value of goods i.e., land in case and building/built up area received which requires to be taxed as business income of the assessee. This act of exchange of assets is a business transaction and is to be considered as sale as the assessee has transferred the right on the property to M/s Brigade enterprises ltd by entering into a Joint Development Agreement. Thus the ownership of the property has witnessed a change. In turn, the assessee firm has received a completed building with all necessary approval and such building is of higher value than the land value recorded by the assessee. ....
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....he income of the assessee. 4. Aggrieved by the order of ld. CIT(A) both the assessees as well as revenue has come up in appeals. While deciding the appeal of the assessee, the coordinate bench of the ITAT in ITA No.1297/Bang/2024 dated 16.8.2024 in para 7.34 to 7.37 has observed as under: "7.34 Now the next question is with regard to computation of business income after conversion of capital asset into stock in trade. 7.35 After conversion of capital asset into stock in trade of business of assessee then the fair market value on the date of conversion is considered as full sale consideration of such capital asset for the purpose of capital gain or loss, such fair market value is considered as cost of such asset as conve....
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....ransfer of capital asset up to the date of conversion in to stock has to be assessed under the head capital gain and the gain in respect of property i.e. after the date of conversion into stock in trade has to be assessed as business income. As assessing officer computed the entire sale consideration under the head long term capital gain, he did not apply the provisions of section 45(2) of the Act. Therefore, the ld. AO should compute the business income in respect of stock in trade of the property i.e. the sale of stock in trade, taking into consideration section 45(2) of the Act in the year of sale of stock in trade and not in the assessment year 2017-18 since there was no sale of constructed area of assessee's share. There was no provisi....
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....to be the sale consideration. 2. Indexation benefit for cost of acquisition and improvement will be considered upto the year of conversion of capital asset into the stock in trade i.e. up to assessment year 2008-09. 3. Year of taxability - Capital gain will be taxed in the year in which stock in trade is sold and not in the AY 2017-18. B. Taxation at the time of sale of stock in trade - When the stock in trade is sold, the assessee needs to pay the tax under the head "Business Income": 1. Sale consideration - The Sale proceeds of stock in trade will be considered as Sale consideration. 2. Purchase cost - The purchase cost of stock in trade is fair market value on the date of conversion. ....
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....dditional ground. 8. We have heard the rival submissions. In the interest of justice, we admit this ground of appeal and proceed to decide the matter as under. 8.1 The Ld DR vehemently argued that the order of the Ld CIT(A) directing the AO to adopt the value of Rs. 3085.50 per sq.ft is not tenable in view of the fact that the CIT(A) has accepted this value without verifying the same from the AO and has proceeded without any basis. Ld DR drawn the attention of the Bench towards the order of the CIT(A) and contended that there is absolutely no basis for arriving at the value of Rs.3085.50 per sq. ft. 8.2 On the other hand Ld Counsel for the assessee relied upon the order of the CIT(A). Finding of the Bench:- 8.3 After consider....