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“Section 45(2)”

Section References (mined)Section 45Section 45(2)75 judgments

The decision most relied on for Section 45(2) is CIT v. B.C. Srinivasa Setty (128 ITR 294), cited in 628 judgments on BharatTax.

Leading authorities on Section 45(2)

CIT v. B.C. Srinivasa Setty
128 ITR 294 · 1981 · Supreme Court
628
citing judgments

When the cost of acquisition of a capital asset cannot be determined, the computation mechanism for capital gains fails, and thus no capital gains can be charged. This establishes a broader principle that a charging section cannot operate in the absence of specific machinery provisions for computation.

CIT v. Ghanshyam (HUF)
315 ITR 1 · 2009 · Supreme Court
363
citing judgments

Interest received under Section 28 of the Land Acquisition Act, 1894, is considered part of the enhanced compensation on compulsory acquisition of land. It is taxable as 'capital gains' and not separately as 'interest income' under the head Income from Other Sources.

Rama Bai v. CIT
181 ITR 400 · 1990 · Supreme Court
258
citing judgments

Interest income is taxable on either an accrual or cash basis, determined by accounting principles. This method was applicable prior to legislative changes that simplified the taxation of interest income.

CIT v. Balbir Singh Maini
398 ITR 531 · 2017 · Supreme Court
228
citing judgments

A transfer of immovable property, for the purpose of capital gains under section 2(47)(v) of the Income-tax Act, occurs only when the agreement allowing possession in part performance of a contract is a registered instrument, as mandated by Section 53A of the Transfer of Property Act.

CIT v. Govindbhai Mamaiya
91 Taxmann.com 20 · 2018 · Supreme Court
205
citing judgments

Interest on enhanced compensation received under Section 28 of the Land Acquisition Act, 1894, is considered part of the compensation, not merely interest income, and is exigible to tax on a receipt basis.

CIT v. Sohana Woollen Mills
296 ITR 238 · 2008 · High Court
180
citing judgments

A mere audit objection, by itself, is insufficient to infer that an Assessing Officer's order is erroneous or prejudicial to the interest of the Revenue for the purpose of initiating revisional proceedings.

Mahender Pal Narang v. CBDT
161 Taxmann.com 301 · 2024 · High Court
178
citing judgments

Interest received as enhanced compensation under Section 28 of the Land Acquisition Act, 1894, for compulsory acquisition of land is taxable as "income from other sources" under Sections 56(2)(viii) and 57(iv) of the Income-tax Act, 1961, and is not exempt under Section 10(37).

CIT v. Hindustan Coca Cola Beverages P Ltd.
331 ITR 192 · 2011 · High Court
152
citing judgments

The Principal Commissioner of Income Tax cannot exercise revisional jurisdiction under Section 263 if the Assessing Officer has taken one of two possible views on a debatable issue during assessment proceedings.

Judgments citing Section 45(2)

DCIT, Circle 4(2), New Delhi vs. M/S Cyberwalk Tech Park Pvt Ltd, New Delhi

In the result, grounds raised by the revenue are dismissed

ITA 448/DEL/2025[2012-13]Status: DisposedITAT Delhi06 Feb 2026AY 2012-13

Bench: Shri S. Rifaur Rahman & Shri Anubhav Sharmadcit, Circle 4 (2), Vs. Cyberwalk Tech Park Pvt. Ltd., Select City Walk 6Th Floor, Delhi. A-3, District Centre Saket New Delhi – 110 017. (Pan : Aadcs8089F) (Appellant) (Respondent) Assessee By : Sh. R.S. Ahuja, Ca & Sh. P.S. Sodhi, Adv Revenue By : Sh. Rajesh Kumar Dhanesta, Sr. Dr Date Of Hearing : 13.11.2025 Date Of Order : 06.02.2026 O R D E R

For Appellant: Sh. R.S. Ahuja, CA &For Respondent: Sh. Rajesh Kumar Dhanesta, Sr. DR
Section 45(2)

respectively in the Profit and Loss account was shown as Rs.38,41,19,450/-. 5. The Assessing Officer invoked the provisions of Section 45(2) of the Act and observed that assessee has not booked the Long Term Capital Gain arising on the transfer of land from capital asset ... trade as cost of purchase. But taken the value was shown by the assessee in its books of accounts. The provisions of Section 45(2) of the Act are very clear which provide that when the fair market value is taken for the purpose of conversion of capital asset into

Milan Theatres P Limited, Mumbai vs. DCIT Circle 12(3)(2), Mumbai

ITA 5072/MUM/2024[2017-18]Status: DisposedITAT Mumbai22 Jan 2026AY 2017-18
Section 143(3)Section 342Section 45(2)

accounting, the proportionate disallowance of interest expenditure, the reworking of capital gains on conversion of capital asset into stock-in-trade under section 45(2) of the Act, the denial of proportionate indexed cost of acquisition, the non-allowance of cost of other capital assets forming part of the mall ... also offered to tax in the year of recognition of sale, i.e., assessment year 2017–18 onwards, in accordance with the provisions of section 45(2) of the Act. 6. In this context, the assessee placed reliance upon section 45(2) of the Act, which provides that notwithstanding anything contained

Mr Popatrao Dashrathrao Suryawanshi, Pune vs. Income Tax Officer, Ward-7(4), Pune

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 234/PUN/2024[2017-18]Status: DisposedITAT Pune21 Jan 2026AY 2017-18

Bench: Shri R. K. Panda & Ms. Astha Chandraassessment Year : 2017-18 Mr. Popatrao Dashrathrao Suryawanshi Ito, Ward 7(4), Pune S.No.38, Tingre Nagar, Havaldar Mala, Vs. Vishrantwadi, Pune – 411015 Pan: Adhps2643F (Appellant) (Respondent) Assessee By : Shri Suhas Bora Department By : Shri Manish Mehta, Addl.Cit Date Of Hearing : 19-01-2026 Date Of Pronouncement : 21-01-2026 O R D E R

For Appellant: Shri Suhas BoraFor Respondent: Shri Manish Mehta, Addl.CIT
Section 142(1)Section 143(2)Section 45(2)Section 54BSection 54F

land as stock in trade and is paying tax on the capital gain and tax on business income as per the provisions of section 45(2) of the Act. This fact, according to the Assessing Officer, clearly shows that the assessee has transferred his capital asset into stock in trade ... flats are treated as converted, then its cost and market value on date of conversion is again the same. Therefore, the issue of section 45(2) is inconsequential. 18. The Ld. Counsel for the assessee also filed a copy of the occupancy certificate dated 23.12.2014 and the following chart disclosing

Smt. Kusum Kujwal, Nainital vs. PCIT, Baireilly

Appeal is dismissed in above terms

ITA 102/DDN/2025[2020-21]Status: DisposedITAT Dehradun13 Jan 2026AY 2020-21

Bench: Sh. Satbeer Singh Godara & Sh. Manish Agarwal

For Appellant: NoneFor Respondent: Ms. Poonam Sharma, CIT-DR
Section 2(14)(iii)Section 263Section 45(2)Section 50C

matter is accordingly set aside to the file of the AO to determine the capital gains in accordance with the provisions of section 45(2) as well as business income on sale of such plots” The matter of similar nature, further, arose before The Hon’ble ITAT, Jaipur ... case of RamswaroopSaudagar Vs ITO where the agricultural land sold as stock in trade and section 45(2) was applied. The Hon’ble ITAT held that, “However, the provisions of Section 45(2) of the Act provides that the profits or gains arising from the transfer by way of conversion

DCIT, Delhi vs. Majestic Properties Private Limited, Delhi

ITA 2129/DEL/2025[2012]Status: HeardITAT Delhi03 Sept 2025

Bench: Shri Challa Nagendra Prasad & Shri M. Balaganeshdcit, Circle-16(1) Vs. Majestic Properties Room No.419, Private Limited, Fourth Floor, C.R. 1/18 B, Asaf Ali Road, Building Ip Estate, Ajmeri Gate Extn. Delhi-110002 Delhi-110002 (Appellant) (Respondent) Pan: Aaacm7158E

For Appellant: NoneFor Respondent: Shri Sahil Kumar Bansal, Sr. DR
Section 115JSection 139(1)Section 143(3)Section 147Section 148Section 151Section 45(2)

circumstances of the case, the Id CIT(A) was not justified in upholding the decision of the AO without considering the provision of Section 45(2) of the Act that speak about the fair market value of the asset on the date of such conversion or treatment as full value

Income Tax Officer, Ward-11(1), Delhi vs. Hkt Corporation Pvt Ltd, Delhi

The appeal are dismissed

ITA 1036/DEL/2024[2020-21]Status: DisposedITAT Delhi09 Jul 2025AY 2020-21

Bench: Shri Satbeer Singh Godara & Shri S. Rifaur Rahman

Section 143(3)

profit or gain arising from transfer of Capital Assets is chargeable to Incоте Tax under the head "Capital Gain". The provisions of Section 45(2) of the I.T. Act, deals with the issue of capital gain where the investment is converted into stock in trade. According to this section ... shares held in investment were sold and the assessee offered the capital gain accrued on the sale of shares. Admittedly, the provisions of Section 45(2) of the I.T. Act, deals with the issue of capital gain where the investment is converted into stock in trade. According to this section

ACIT, Ltu-2, Chennai vs. Ashok Leyland Limited, Chennai

In the result, appeal filed by the assessee is partly allowed and the appeal of the Revenue is dismissed

ITA 2618/CHNY/2019[2015-16]Status: DisposedITAT Chennai07 Jul 2025AY 2015-16

Bench: Shri Aby T. Varkey & Shri Amitabh Shukla

For Appellant: Mr.R. Vijayaraghavan, AdvFor Respondent: Mr.A. Sasikumar, CIT
Section 115JSection 143(3)Section 14A

Income upon the sale of ITA Nos.2330 & 2618/Chny/2019 (AY 2015-16) M/s. Ashok Leyland Ltd. :: 47 :: converted shares of Avia in terms of Section 45(2) of the Act, which is extracted below: Amount (in lacs) Computation of Capital Gains [As per Section 45(2) of the Act] Investment Investment ... date of conversion 76.91 82.67 159.60 Cost of acquisition 28,570.50 24,248.88 - - Capital Loss 28493.57 24166.20 Computation of Business Income [As per Section 45(2) of the Act] Particulars Amount Actual Sale Consideration 187.15 Less: FMV as on date of conversion 159.60 Business profit on sale of investment

Income Tax Officer, Ward-1, Barmer vs. Pushp Raj Bohra, Jalore

The appeal of the revenue is allowed, in the manner discussed as above

ITA 200/JODH/2024[2017-18]Status: DisposedITAT Jodhpur01 Jul 2025AY 2017-18

Bench: Shri Rajpal Yadav, HonʼBle & Dr. Mitha Lal Meena, Hon'Bleito, Ward-1, Barmer. Vs. Pushp Raj Bohra, M-09, Shivaji Nagar, Jalore - 343001. Pan No. Aanpb4456C Assessee By Shri Goutam Chand Baid, C.A. Revenue By Smt. Runi Pal, Cit (D.R.) Date Of Hearing 29.04.2025. Date Of Pronouncement 01.03.2025. Order Per Dr. Mitha Lal Meena, A.M.: The Captioned Appeal Has Been Filed By The Revenue Against The Order Of The Id. National Faceless Appeal Centre [Nfac/Cit(A)], Delhi Dated 08.02.2024 In Respect Of Assessment Year: 2017-18 Where The Department Has Raised Following Grounds: 1. Whether The Id. Cit(A) Is Justified In Facts & Law In Directing To Treat The Income From The Sale Of Immovable Properties As Capital Gains Instead Of Business Income, By Ignoring The Fact That Assesse & His Business Concerns Are Engaged In The Business Of Property & Real Estate Development & Huge Expenses Of Rs. 8.72 Cr. Were Incurred By Assessee On Development Of Projects To Earn Profit. 2. Whether The Id. Cit(A) Has Erred In Law & Facts By Directing The Ao To Treat The Income From The Sale Of Immovable Properties As Income From Capital Gains Instead Of Business Income By Merely Following The Order Of Hon'Ble

Section 142(1)Section 143(3)Section 250Section 54ESection 54F

business transaction instead of efforts for rea/isation of proper consideration of capita/ asset, business income and capita/ gain be computed invoking provisions of section 45(2). 4. That on the facts and in the circumstances of the case, Ld. AO erred in restricting the claim of expenditure towards construction

Dushyant Bharatbhai Mehta, Rajkot vs. ITO WD-(2)(1)(2), Rajkot

In the result, appeal filed by the assessee, is allowed

ITA 422/RJT/2024[2015-2016]Status: DisposedITAT Rajkot30 Jun 2025AY 2015-2016

Bench: Dr. Arjun Lal Saini & Shri Dinesh Mohan Sinhaआयकर अपीलसं./Ita No.422/Rjt/2024 (निर्धारणवर्ष / Assessment Year: (2015-16) Dushyant Bharatbhai Mehta (Physical Hearing) C/O Bhabha Fashions 34/35 Bhabha Bazzar, Ghee Kanta Road, Vs. The Ito, Ward -2(1)(2), Aaykar Bhawan, Rajkot Rajkot 360001 (Gujarat) स्थायीलेखासं./जीआइआरसं./Pan/Gir No.: Ahgpm4763P (Assessee) (Respondent) Assessee By Respondent By : Shri Vijay Mehta, Ld. Ar : Shri Abhimanyu Singh, Yadav, Ld. Sr. Dr Date Of Hearing : 01/05/2025 Date Of Pronouncement : 30/06/2025 आदेश / Order Per, Dr. A. L. Saini, Am: By Way Of This Appeal, The Assessee Has Challenged Correctness Of The Order Dated 27-05-2024 Passed By The Learned Cit(A), In The Matter Of Assessment Under Section 143(3) Of The Income Tax Act 1961, For The

For Respondent: Shri Vijay Mehta, Ld. AR
Section 142(1)Section 143(1)Section 143(3)Section 54Section 54BSection 54F

capital assets into stock in trade is chargeable to tax in the year in which stock -in- trade is sold/transferred. The provision of section 45(2) of the Act, provides that although such a conversion of capital assets into stock- in- trade of a business, carried on by the assessee ... transfer arises in the year in which such conversion takes place and, accordingly, capital gain would normally arise in that very year. However, section 45(2) of the Act, post- pones the assessment of such capital gains to the year in which the stock-in- trade is actually sold

Anil Shrichand Sadhwani, Nashik vs. ITO, Ward 2(1), Nashik

Appeal is allowed

ITA 2443/PUN/2024[2015-16]Status: DisposedITAT Pune20 May 2025AY 2015-16

Bench: Dr.Dipak P. Ripote & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.2443/Pun/2024 िनधा"रण वष" / Assessment Year: 2015-16 Anil Shrichand Sadhwani, V The Income Tax Officer, Chhatrapati Shivaji Hsg Soc, S Ward-2(1), Pune. Nashik Road, Jailroad, Nashik – 422101. Maharashtra. Pan: Annps1615D Appellant/ Assessee Respondent / Revenue Assessee By Shri Sanket M Joshi – Ar Revenue By Shri Ramnath P Murkunde – Dr Date Of Hearing 23/04/2025 Date Of Pronouncement 20/05/2025 आदेश/ Order Per Dr. Dipak P. Ripote, Am: Thisappeal Filed By The Assessee Is Against The Order Of Ld.Commissioner Of Income Tax(Appeals)[Nfac], Passed Under Section 250Of The Income Tax Act, 1961; Dated 23.09.2024 For Assessment Year 2015-16. The Assessee Has Raised The Following Grounds Of Appeal : “1. The Learned Ctt(A) Erred In Confirming The Addition U/S 50C Of Rs.6,15,600 By Taxing The Appellant'S Share In Difference Between Govt. Valuation Of Rs.2,52,31,000 & Actual Consideration Of Rs 2,40,00,000 Received On Sale Of Immovable Property As Income U/S 50C Without

Section 143(3)Section 250oSection 263Section 50CSection 54ESection 54F

capital asset into stock-in- trade. Such capital gain would arise in the year of conversion, so however, in terms of section 45(2) of the Act, its taxability is postponed to the year in which such stock-in-trade is actually sold or otherwise transferred by the assessee ... 54EC of the Act should be 15 taken from the date such stock-in-trade is sold or otherwise transferred in terms of section 45(2) of the Act, though the taxability of capital gain was on the basis of ‘transfer’ as understood in section 45(2

Percival Joseph Pereira, Mumbai vs. Income Tax Officer (It) -3(3)(1), Mumbai

In the result, both the appeals by the assessee are allowed

ITA 4662/MUM/2024[2016-17]Status: DisposedITAT Mumbai19 May 2025AY 2016-17

Bench: Amit Shukla & Shri Girish Agrawal

Section 143(3)Section 271(1)(c)Section 45(5)(b)Section 56Section 56(2)(viii)

paper book placed on record. Percival Joseph Pereira; AY 2016-17 8.1. The issue to be considered relates to applicability of proviso to section 45(2)(b) for bringing to tax the enhanced compensation received by the assessee in the year under consideration and interest thereon. Before, we delve

Percival Joseph Pereira, Mumbai vs. Income Tax Officer (It)-3(3)(1), Mumbai

In the result, both the appeals by the assessee are allowed

ITA 4661/MUM/2024[2016-17]Status: DisposedITAT Mumbai19 May 2025AY 2016-17

Bench: Amit Shukla & Shri Girish Agrawal

Section 143(3)Section 271(1)(c)Section 45(5)(b)Section 56Section 56(2)(viii)

paper book placed on record. Percival Joseph Pereira; AY 2016-17 8.1. The issue to be considered relates to applicability of proviso to section 45(2)(b) for bringing to tax the enhanced compensation received by the assessee in the year under consideration and interest thereon. Before, we delve

Assisstant Commisioner of Income Tax, Chennai vs. Estra Enterprises Private Limited, Chennai

ITA 1653/CHNY/2024[2014-15]Status: DisposedITAT Chennai16 May 2025AY 2014-15
For Appellant: Mr. S.Senthil Kumaran, CITFor Respondent: Mr.R.Sivaraman, Advocate
Section 143(3)Section 147Section 148Section 45(2)Section 53A

change of opinion cannot be said to exist or arise. 5. The Ld. CIT(A) has failed to appreciate that the provisions of section 45(2) are not attracted in this case and Capital Gains are to be taxed by invoking section 53A of transfer of Property ... Directors, in the meeting held on 8th June 2013. The said land was sold in parts only from April 2015. In terms of section 45(2) of the Act, the liability to pay the taxes arises in the year of sale from the financial year

Shri Navinchandra N. Patel, Vadodara vs. The ACIT, Circle-1(2), Vadodara

In the result, the appeal of the assessee is allowed

ITA 869/AHD/2023[2012-13]Status: DisposedITAT Ahmedabad30 Apr 2025AY 2012-13

Bench: Dr. B.R.R. Kumar, Vice-Ms. Suchitra Kamble

For Appellant: Shri Vipul Shah, ARFor Respondent: Shri R.N. Dzouza, CIT-DR
Section 143(3)Section 147Section 148Section 148(2)Section 14ASection 234BSection 250Section 271(1)(c)Section 45(2)Section 69

That the Hon'ble CIT (Appeals) has erred in fact and in law in confirming the action of the Ld. AO in invoking section 45(2) r.w.s. 2(47) and thereby making addition of Rs. 9,40,27,625/- (8,97,16,439 + 43,11,186) without considering various facts ... referred land works out to Rs. 5167.31 lakhs (114829 square meter X jantri rate of Rs. 4,500 per square meter). As per section 45(2) of the act, the notional short term capital gain arising from transfer by way of conversion of capital asset into stock in trade

M/S. Anand Diagnostic Laboratory, Bengaluru vs. The Deputy Commissioner of Income Tax, Central Circle-2(4), Bengaluru

In the result, the appeal by the assessee is partly allowed

ITA 969/BANG/2024[2018-19]Status: DisposedITAT Bangalore29 Apr 2025AY 2018-19

Bench: Shri Prashant Maharishi & Shri Soundararajan K.

For Appellant: Shri Arjunraj, AdvocateFor Respondent: Shri Netrapal M S, Addl. CIT(DR)(ITAT)
Section 143Section 143(3)

969/Bang/2024 Page 21 of 35 her capital account upon her retirement from partnership was held to be not hit by the provisions of section 45(2) of the Act. eld to be not hit by the provisions of section 45(2) of the Act, since there is no specific transfer

M/S. Anand Diagnostic Laboratory, Bengaluru vs. The Deputy Commissioner of Income Tax, Central Circle-2(4), Bengaluru

In the result, the appeal by the assessee is partly allowed

ITA 968/BANG/2024[2017-18]Status: DisposedITAT Bangalore29 Apr 2025AY 2017-18

Bench: Shri Prashant Maharishi & Shri Soundararajan K.

For Appellant: Shri Arjunraj, AdvocateFor Respondent: Shri Netrapal M S, Addl. CIT(DR)(ITAT)
Section 143Section 143(3)

969/Bang/2024 Page 21 of 35 her capital account upon her retirement from partnership was held to be not hit by the provisions of section 45(2) of the Act. eld to be not hit by the provisions of section 45(2) of the Act, since there is no specific transfer

Asst. Commissioner of Income Tax, Central Circle-2(3), Bengaluru vs. Nalapad Hotels and Convention Centre, Bengaluru

ITA 1959/BANG/2024[2017-18]Status: DisposedITAT Bangalore24 Apr 2025AY 2017-18

Bench: Shri Laxmi Prasad Sahu & Shri Prakash Chand Yadav

For Respondent: Sri V. Srinivasan, A.R
Section 153C

that business income is liable to be taxed in this year as legally not sustainable since in terms of the provisions of section 45(2) of the Act, the business income on account of conversion of capital asset into stock in trade is taxable in the year when the asset

Asst. Commissioner of Income-Tax, Central Circle-2(3), Bengaluru vs. Nalapad Properties, Bangalore

In the result, both appeals of the revenue are allowed for statistical purposes

ITA 1958/BANG/2024[2017-18]Status: DisposedITAT Bangalore24 Apr 2025AY 2017-18

Bench: Shri Laxmi Prasad Sahu & Shri Prakash Chand Yadavassessmentyear:2017-18

For Appellant: Sri V. Srinivasan, A.RFor Respondent: Sri Subramanian S., D.R
Section 153CSection 45(2)

that business income is liable to be taxed in this year as legally not sustainable since in terms of the provisions of section 45(2) of the Act, the business income on account of conversion of capital asset into stock in trade is taxable in the year when the asset ... 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

ACIT, Circle-50(1), New Delhi vs. Harkanwarpal Singh Lamba, New Delhi

In the result, the appeal of the Revenue is allowed for statistical

ITA 604/DEL/2020[2016-17]Status: DisposedITAT Delhi09 Apr 2025AY 2016-17

Bench: Shri Yogesh Kumar Us & Shri Avdhesh Kumar Mishra

Section 10(38)

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’: NEW DELHI BEFORE SHRI YOGESH KUMAR US, JUDICIAL MEMBER AND SHRI

Ramchandraudaysinghjadhavrao, Pune vs. ACIT, Circle-3, Pune

ITA 1399/PUN/2024[2016-17]Status: DisposedITAT Pune24 Feb 2025AY 2016-17

Bench: Shri R. K. Panda & Ms. Astha Chandra

For Appellant: Shri Kishor B PhadkeFor Respondent: Shri Ajay Kumar Keshari
Section 133ASection 139(1)Section 139(4)Section 143(1)Section 271(1)(c)Section 45(2)

resultant total Long term Capital Gain thereon will be offered to tax proportionately as and when it is sold in accordance with Section 45(2) of the Income Tax Act. Further, for A.Y.2016-17, the proportionate capital gain in respect of buildings C1, C2 and C3 (partial) comes at Rs.10.74 crores