Conversion of stock in trade into capital asset at
year beginning by means of a resolution - Taxability whether as business income
or capital gains
Facts:
Assessee's at the beginning of the year converted some
of their investments held as stock-in-trade into capital asset thru board
resolution and then sold the same and returned LTCG and STCG. Revenue's plea
was that the same was business income and not capital gains. On appeal CIT(A)
allowed LTCG but denied benefit of STCG. On higher appeal -
Held in favour of the assessee that once conversion was
done from stock in trade into capital asset - then the gains will be Capital
gains.
Applied:
CBDT Circular No. 6/2016 dtd 29-02-2016, Instruction No.
1827, dated 31-8-1989 and Circular No.4 of 2007 dated 15-6-2007
Express Securities Pvt Ltd. (2014) 364 ITR 488 (Del-HC)
: 2014 TaxPub(DT) 2479 (Del-HC)
Sukarma Finance Ltd. [ITA No. 110/2015, dt. 15-04-2015]
Ed. Note: Assessee's
modus operandi is explained by the below treatment post conversion of stock in
trade into capital asset
Case: Arunima
Adcon Services (P) Ltd. v. ACIT 2023 TaxPub(DT) 6049 (Del-Trib)