ITAT upheld deletion, and treated flat as stock in trade
ITAT upheld deletion, and treated flat as stock in trade
Assessee company derived income as a land developer, and from letting out its immovable properties. Assessee, pursuant to amalgamation, brought forward asset of a flat as Stock in Trade in its books. It sold the flat, and claimed develepoment expenses. AO treated flat as capital asset u/s 50C (of Income Tax Act, 1961) and made addition, and disallowed expenses. CIT(A) deleted additions. ITAT upheld CIT(A)’s order, and treated flat as stock in trade.-501680
1. Assessee company carried on business as developers of land and building, and from letting out its immovable properties.
2. It earned rental income, dividend income, interest income, profit from partnership firm and capital gains on sale of flat.
3. The assessee, pursuant to amalgamation, brought forward the asset of a flat as Stock in Trade in its books.
4. It sold the flat.
5. AO substituted the value determined by the stamp valuation authority full value of consideration and worked out capital gains.
6. Assessee claimed develepoment expenses of Rs. 11,44,634.
7. AO treated the flat as capital asset u/s 50C (of Income Tax Act, 1961) and made addition, and disallowed expenses.
8. CIT(A) deleted the additions.
On appeal, the ITAT held as under:
9. We also find from the balance sheet of the assessee for the financial year 2007-08, that the assessee had duly reflected the value of Unit No. 407B at Rs. 10,48,320/- as stock in trade as on 1.4.2000.
10. Hence there is no question of treating the same as capital asset and invoking section 50C (of Income Tax Act, 1961) for the purpose of computing capital gains on sale of the same.
11. In view of the aforesaid facts and findings, we hold that the Learned CIT(A) is right in restricting the capital gains at Rs. 3,56,354/- as against Rs. 45,62,018/- made by the Learned AO.
12. we hold that the assessee had duly bifurcated the development expenses of Rs. 11,44,634/- towards Unit No. 407A (capital asset) at Rs. 2,86,664/- which is to be granted deduction while computing capital gains and balance sum of Rs. 8,57,970/- towards Unit No. 407B (stock in trade) which is to be granted deduction while computing business income.
Case Reference - I.T.O Vs. M/s. Mid Land Projects Ltd.
IN THE INCOME TAX APPELLATE TRIBUNAL, "A" BENCH, KOLKATA
Before : Shri N.V. Vasudevan, Shri M. Balaganesh,
Judicial Member, and Accountant Member
ITA No. 505/Kol/2012
(A.Y 2008-09)
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