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| DATE: | April 15, 2012 (Date of publication) |
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| Click here to download the judgement (kan_50C_capital_asset_stock_in_trade.pdf) |
S. 50C does not apply to land & building held as ‘stock-in-trade’
The assessee sold a plot of land for Rs. 79 lakhs. The AO held that the said plot was a capital asset and that the gains had to be computed in accordance with s. 50C. The CIT (A) & Tribunal upheld the assessee’s claim that as the said plot was held as stock-in-trade, s. 50C did not apply. On appeal by the department to the High Court, HELD dismissing the appeal:
For applicability of s. 50C, it is essential that an asset should be a “capital asset”. The question whether an asset is a “capital asset” or “stock-in-trade” is one of fact and has to be determined as per the guidelines laid down. On facts, the assessee was a builder and the investment in purchase and sale of plots was ancillary and incidental to the business activity. The assessee had treated the land as stock in trade in the balance sheet. Consequently, s. 50C had no application.
The Madras High Court had held this view in CIT vs Thiruvengadam Investments P Ltd (320 ITR 345) in 2009.