The asseee has treated the lands received under family arrangement as stock in trade in the books of account. The AO applied the provision of S.45(2) and assessed as long term capital gains\u00a0 . CIT (A) affirmed the order of the AO . On appeal the Tribunal held that \u00a0the properties were held as stock in trade by the joint family before they were allotted to the assessee on partition and the asssessee continued to carry on real estate business even after partition . Thus there was no conversion of capital assets in to stock in trade either by the assessee or the joint family hence provisions of S. 45(2) of the Act\u00a0 were not attracted .\u00a0 On appeal by the revenue the High court affirmed the order of the Tribunal .\u00a0 Relying on the decision of Supreme Court in Kalooram Govindram ( 1965) 57 ITR 355 (SC)\u00a0 the court observed that\u00a0 except in the case of fraud , collusion , inflation , and deflation of value for ulterior purposes\u00a0 , the cost of the asset to a divided member must\u00a0 necessarily be its cost to him , at the time of partition whether mentioned in the \u00a0partition deed ascertained aliunde . \u00a0\u00a0\u00a0(ITA No. 318 of 2012 dt .25 -6 -2020) (AY. 2006 -07)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 45(2) : Capital gains – Conversion of a capital asset in to stock-in-trade \u2013 Asset received under family arrangement treated as stock in trade \u2013 Addition cannot be made as capital gains. [ S.2(14), 49(1)]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-14544","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3MA","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/14544","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=14544"}],"version-history":[{"count":3,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/14544\/revisions"}],"predecessor-version":[{"id":17701,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/14544\/revisions\/17701"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=14544"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=14544"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=14544"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}