ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(3), BENGALURU vs. NALAPAD PROPERTIES, BANGALORE
What did the Tribunal hold?
The Tribunal held that the conversion of capital asset to stock-in-trade occurred in AY 2008-09, and the year of taxability for business income arising from the sale of stock-in-trade is not AY 2017-18. It found that the CIT(A) adopted a valuation rate without proper basis and directed that the matter of valuation and the correct year of taxability be restored to the Assessing Officer for fresh examination, with a referral to the departmental valuation officer.
What were the facts?
A search and seizure action on M/s. Brigade Enterprise Ltd. led to proceedings against the present assessees (sister concerns). The AO found undeclared income from transactions involving land as stock-in-trade converted into a Joint Development Agreement (JDA), taxing the difference in value as business income in AY 2017-18. Assessee contended it was an exchange and tax was due only upon sale, while the CIT(A) partly allowed the appeal but directed a specific valuation rate.
What were the issues?
1. The correct assessment year for taxing business income arising from the conversion of a capital asset into stock-in-trade and subsequent development under a JDA. 2. The appropriate valuation method and rate for the developed area received by the assessee.
Which sections of the Income-tax Act were involved?
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- Empire Jute Co. Ltd. v. CIT622 citing124 ITR 1 · 1980 · SC
Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI PRAKASH CHAND YADAV
PER BENCH:-
Both these appeals of the revenue are arising from the order of ld. CIT(A) dated 30.6.2024 and relates to assessment year 2017-
Since both the assessee are sister concerns having same facts and circumstances, we are deciding these appeals by way of this consolidated order. M/s. Nalapad Properties, Bangalore & M/s. Nalapad Hotels & Convention Centre, Bangalo
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