Dismissing the appeal of the revenue the Court held that when a capital asset is converted in to stock in trade, capital gains to be computed on sale up to date of conversion of Land into stock- in-trade and profit on sale of stock in trade to be assessed as business income or loss. Capital gains to be set off against business loss.( AY.2009-10)
CIT v. Essorpe Mills Ltd. (2018) 404 ITR 323 (Mad) (HC)
S. 45(2) : Capital gains – Conversion of a capital asset in to stock-in-trade -Capital gains to be computed on sale up to date of conversion of Land into stock- in-trade and profit on sale of stock in trade to be assessed as business income or loss. Capital gains to be set off against business loss [ S.28(i) ]