TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 1748
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....e 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 24.3.2020. During the course of assessment proceeding....
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....cessary 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. 16. Further, it is seen that under the joint development ag....
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....th 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 converted into stock in trade and at the time of sale of such stock in trade, the same pric....
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....he 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 provision in the Act which deals with the determination of business income or capital gain on conve....
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....onsidered 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. 3. Year of taxability - The Business Income will be taxable in the year in which stock in trade is sold and not in the AY 2017-18. 7.3....
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.....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 considering the rival submissions we observe that it is an undisputed fact that the assessee has converted the capital asset into stock in trade in assessment year 2008-09 and ther....