Capital Asset Conversion Requires Proven Business Stock Treatment; Paper Consideration in Spousal Flat Transfers Does Not Create Taxable Business Income.

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....Conversion of a capital asset into stock-in-trade under a joint development arrangement requires proof that the asset entered the assessee's business stock; executing such an arrangement alone, particularly without a real-estate business, does not establish conversion. On that basis, the long-term capital-gains addition was deleted. A transfer of flats to a spouse without actual consideration, made to safeguard property interests, is not a sale merely because a sale deed records consideration. The deed recital cannot establish income received, and the business-income addition was deleted.....