Assessee is\u00a0 in business of real estate development. She converted her land into stock-in-trade.\u00a0 Thereafter, she earmarked certain land for road and other common amenities purpose in terms of municipal regulations.\u00a0 Assessee had executed a gift deed and handed over land in favour of Municipality.\u00a0 Assessing Officer\u00a0 held that the\u00a0 assessee had relinquished her right in land earmarked for road and other common facilities which was transfer as per section 47(iii) and, thus, computed capital gains on same and made additions to income.\u00a0 The\u00a0 Assessing Officer also invoked section 45(2) on ground that when land was converted into stock-in-trade, assessee was liable to pay tax on business profits in year in which such land was transferred.\u00a0\u00a0 CIT (A) deleted the addition. On appeal the Tribunal held that the\u00a0 land earmarked for public utility purpose in terms of municipal regulations while forming residential layout could not be brought to tax either under section 47(iii) or 45(2) because relinquishment of right in such land could not be considered as extinguishment of any right in property which could be considered as transfer under section 47(iii). Since the\u00a0 assessee had executed a gift deed of land without any consideration, question of computing long-term capital gains on such land and also business profit in terms of section 45(2) would not arise. Order of CIT(A) deleting the addition is affirmed.\u00a0 (AY. 2015-16)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 45(2) : Capital gains-Conversion of a capital asset in to stock-in-trade-Land converted into stock-in trade-Earmarked land for road and other common amenities purpose in terms of municipal regulations-No transfer-Neither capital gains nor business profits.[S. 45, 47 (iii)] <\/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-43248","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-bfy","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/43248","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=43248"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/43248\/revisions"}],"predecessor-version":[{"id":43249,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/43248\/revisions\/43249"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=43248"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=43248"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=43248"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}