M/s Magus Bengal Estates LLP, Kolkata V. A.C.I.T.,Central Circle-3(2), Kolkata

ITSSA 53/KOL/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4007 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 27-01-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAM BILASH MEENA
• Assessee Lawyers: S K TULSIYAN
• Keywords: Capital asset; Business income; Cost of acquisition; Date of conversion; Fair market value; Capital Gains; CHAPTER IV
• Section: 45(2); 143(3); 142(1); 153A; 40(a)(ia); 194C; 143(2); 264; 73; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A (VIRTUAL COURT HEARING), BENCH KOLKATA BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI S. S. GODARA, JM ./I.T(SS)A NO.53/KOL/2020 ( [ [ / ASSESSMENT YEAR: 2017-18) M/S MAGUS BENGAL ESTATES LLP 33A, CANAL CIRCULAR ROAD, KOLKATA 700054. VS. ACIT, CENTRAL CIRCLE-3(2), KOLKATA. ./ ./PAN/GIR NO.: AAUFM9171E (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI S. K. TULSIYAN, ADVOCATE RESPONDENT BY : SHRI RAM BILASH MEENA, CIT-DR / DATE OF HEARING : 01/10/2020 /DATE OF PRONOUNCEMENT : 22/10/2020 / O R D E R PER SHRI S. S. GODARA: THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2017-18 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (A) - 21, KOLKATAS ORDER DATED 26.12.2019 PASSED IN CASE NO.CIT(A), KOLKATA-21/10672/2018-19 INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERSUED. 2. THE ASSESSEE HAS RAISED THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL: 1. THAT, THE IMPUGNED ADDITIONS/DISALLOWANCES MADE BY THE LD. A.O AND SUSTAINED BY THE LD. CIT(A) ARE ILLEGAL, ARBITRARY, ERRONEOUS, BEREFT OF JURISDICTION AND UNSUSTAINABLE IN LAW. 2. THE LD. A.O. AND THE LD.CIT (A) HAVE ERRED IN OPINING THAT THE ENTIRE REVENUE REAL ESTATE DEVELOPMENT OF RS.1,03,84,50,640/- IS TO BE TREATED AS INCOME UNDER THE HEAD 'INCOME FROM BUSINESS' AS THE INTENTION OF THE ASSESSEE WAS ALONG TO CONSTRUCT IT PARK ON THE 13 ACRES OF LAND IN ACTION AREA II, NEW TOWN KOLKATA, RAJARHART AND NOT USE IT AS A CAPITAL ASSET IN SPITE OF THE FACT THAT THE ASSESSEE EXPLAINED THAT ITS INTENTION ALL ALONG WAS TO DEVELOP AN IT PARK ON THE IMPUGNED PROPERTY, BUT DUE TO THE DETERIORATED FINANCIAL HEALTH OF MANI GROUP THE ENTIRE PROPERTY WAS CONVERTED INTO STOCK IN TRADE FOR THE PURPOSES OF SALE IN AY 2014-15 AND THUS WHEN THE SALE OF THE SAID STOCK IN TRADE OCCURRED THE INCOME WAS SHOWN AS 'REVENUE FROM REAL ESTATE DEVELOPMENT' UNDER THE HEAD OF CAPITAL GAINS WHICH WAS ASSESSABLE TO TAX AS PER SEC 45(2) OF THE INCOME TAX ACT, 1961. I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 2 3. THE LD. A.O. AND THE LD. CIT(A) HAVE ERRED IN IGNORING THE FACT THAT THE IMPUGNED PROPERTY WAS TREATED AS A CAPITAL ASSET BY THE ASSESSEE FROM FY 2007-08 TO FY 2012-13 AND WAS ONLY THEN CONVERTED INTO STOCK IN TRADE IN FY 2013-14. 4. THE LD. A.O. AND THE LD.CIT(A) HAVE ERRED IN QUESTIONING THE ASSESSEE'S TREATMENT OF THE IMPUGNED PROPERTY IN THE AY 2017-2018, WHEN THE TREATMENT OF THE SAME IN AY 2012- 2013 AND AY 2013-2014 (BEING THE UNABATED AYS) WAS NOT QUESTIONED BY THE LD. A.O. AND NEITHER HAS ANY ISSUE IN RESPECT OF THE IMPUGNED PROPERTY FORMED PART OF THE SEARCH ASSESSMENT ORDERS PASSED BY THE LD. A.O. FOR AY 2012-2013 AND AY 2013-2014 U/S 143(3) R/W 153A OF THE ACT. 3. LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED AT THE OUTSET THAT THE CIT(A)S DETAILED DISCUSSION AFFIRMING THE ASSESSING OFFICERS ACTION TREATING THE ASSESSEES REAL ESTATE DEVELOPMENT INCOME DECLARED UNDER THE HEAD CAPITAL GAINS TO BUSINESS INCOME HEAD READS AS UNDER: I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 3 I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 4 I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 5 I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 6 I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 7 I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 8 I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 9 I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 10 I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 11 I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 12 I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 13 4. MR. TULSIYAN VEHEMENTLY CONTENDED DURING THE COURSE OF HEARING THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN INITIATING SECTION 153A PROCEEDINGS AGAINST THIS TAXPAYER SINCE NO INCRIMINATING MATERIAL HAD BEEN FOUND/SEIZED DURING THE COURSE OF SEARCH CARRIED OUT IN M/S MANI GROUP DATED 22.06.2016. HE QUOTED SECTION 153A OF THE ACT ALONG WITH A CATENA OF CASE LAWS I.E. PCIT VS. M/S SALASAR STOCK BROKING LTD. ITAT 264 OF 2016 DATED 24.08.2016 (CAL) , CIT VS. VEERPRABHU MARKETING LTD. [2016] 73 TAXMANN.COM 149 (CALCUTTA) AS WELL AS PCIT VS. MEETA GUTGUTIA 395 ITR 526. REVENUES SPECIAL LEAVE PETITION BEFORE THE HONBLE APEX COURT DISMISSED ON 02.07.2011, CIT VS. KABUL CHAWAL (2016) 380 ITR 573(DEL), CIT V. SINHGAD TECHNICAL EDUCATION SOCIETY (2017) 397 ITR 344 (SC) THAT SUCH ASSESSMENTS NOT BASED ON ANY INCRIMINATING MATERIAL I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 14 FOUND/SEIZED DURING THE COURSE OF SEARCH ARE NOT VALID. LEARNED COUNSEL ALSO DREW SUPPORT FROM TRIBUNALS SIMILAR ORDERS IN LMJ INTERNATIONAL LTD. VS. DCIT (2007) 26 CCH 0750 (KOL-TRIB) AND ACIT VS. MAJESTIC COMMERCIAL (P) LTD. (2020) 116 TAXMANN.COM 412(KOLKATA-TRIB.) ECHOING THE VERY LEGAL PROPOSITION. 5. COMING TO MERITS, LEARNED COUNSEL INVITED OUR ATTENTION TO THE ASSESSEES PAPER BOOK RUNNING INTO 14 PAGES CONTAINING THE ASSESSING OFFICERS ASSESSMENT ORDERS; ALL DATED 30.12.18 FOR ASSESSMENT YEAR 2014-15 TO 2016-17; RESPECTIVELY. HE CLARIFIED THAT ALL THESE ASSESSMENTS FRAMED ARE IN FURTHERANCE TO THE VERY SEARCH ACTION DATED 22.06.2016. HE TOOK US TO PARA 5.3 PAGE 4 IN ASSESSMENT ORDER RELEVANT TO ASSESSMENT YEAR 2014-15 INDICATING THEREIN THAT THIS TAXPAYER HAD CONVERTED ITS CAPITAL WORK-IN-PROGRESS INTO STOCK-IN-TRADE AS ON 31.03.14. THE ASSESSING OFFICER INVOKED SECTION 40(A)(IA) R.W.S. 194C DISALLOWANCE OF RS.1,38,64,900/- THEREIN ONLY. HE FURTHER REDUCED STOCK-IN-TRADE FROM RS.286,76,26,246/- TO RS.284,86,77,407/- IN VIEW OF THE FOREGOING SECTION 40(A)(IA) DISALLOWANCE. LEARNED COUNSELS CASE ACCORDINGLY IS THAT THE VERY FACTUAL POSITION PERTAINING TO THE ASSESSEES CONVERSION OF CAPITAL WORK-IN-PROGRESS TO STOCK-IN-TRADE CONTINUED TO BE ACCEPTED IN THE INTERVENING TWIN ASSESSMENT YEARS 2015-16 AND 2016-17 ASSESSMENTS AS WELL WHICH HAVE ATTAINED FINALITY AND THEREFORE, BOTH THE LOWER AUTHORITIES ACTION UNDER CHALLENGE IN NOT ASSESSING THE NET INCOME DERIVED FROM TRANSFER OF THE SAID CAPITAL ASSET(S) IN THE IMPUGNED ASSESSMENT YEAR TO THE TUNE OF RS.103,84,50,640/- AS CAPITAL GAINS IS NOT SUSTAINABLE IN THE EYES OF LAW. 6. LEARNED AUTHORIZED REPRESENTATIVE FURTHER REFERRED TO SECTION 45(2) R.W.S SECTION 2(47)(IV) DEFINING TRANSFER OF A CAPITAL ASSET IN CASE INVOLVING CONVERSION THEREOF TO STOCK-IN-TRADE. HE QUOTED THIS TRIBUNALS DECISION IN (2003) 260 ITR (A.T.) 109 (ITAT-KOL) OCTAVIUS STEEL AND CO. LTD. VS. ACIT THAT SECTION 45(2) IS IN THE NATURE OF NON-OBSTANTE CLAUSE OVERRIDING ALL OTHER PROVISIONS FOR THE PURPOSE OF ASSESSING CAPITAL GAINS ARISING IN CASE OF CAPITAL ASSET CONVERTED TO STOCK-IN-TRADE IN THE YEAR IN WHICH THE TRANSFER TAKES PLACE AND ALSO FAIR MARKET VALUE OF SUCH A CAPITAL ASSET ON THE DATE OF CONVERSION HAS TO BE DEEMED AS FULL VALUE OF THE I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 15 CONSIDERATION RECEIVED OR ACCRUED AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET. MR. TULSIYAN DREW OUR ATTENTION TO THE FOREGOING FACTS ONCE AGAIN THAT THE ASSESSEES CAPITAL ASSET(S) WHICH STOOD CONVERTED TO STOCK-IN-TRADE AS ON 31.03.14 HAVE TO BE TREATED UNDER THE ABOVE-STATED STATUTORY PROVISION THAN THAT ON THE WHIMS OF THE LOWER AUTHORITIES DISPUTING THE ENTIRE CONVERSION AT THIS BELATED STAGE. HE HIGHLIGHTED THAT THE LEGISLATURE HAS ALSO INSERTED SECTION 2(24)(XIIA) ALONG WITH SECTION 2(42A) EXPLANATION 1(I)(BA), SECTION 2(28)(VIA) AND SECTION 49(9) IN THE ACT VIDE FINANCE ACT 2018 APPLICABLE FROM 01.04.19 INTER ALIA PROVIDING FOR FAIR MARKET VALUE OF SHARE CAPITAL ASSETS, PERIOD OF HOLDING THEREOF FOR THE PURPOSE OF CAPITAL GAIN COMPUTATION, COST OF ACQUISITION IS TO BE THE FAIR MARKET VALUE ON THE DATE OF CONVERSION; RESPECTIVELY. HE LASTLY SUBMITTED THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN ASSESSING THIS TAXPAYERS INCOME OF RS.103,84,50,640/- DECLARED UNDER CAPITAL GAINS AS BUSINESS INCOME OF THE RELEVANT PREVIOUS YEAR. 7. LEARNED CIT-DR DREW STRONG SUPPORT FROM BOTH THE LOWER AUTHORITIES ACTION AND MORE PARTICULARLY THAT OF THE CIT(A) DECLINING THE ASSESSEES PRAYER THEREBY HOLDING THAT IT WAS VERY MUCH INCUMBENT FOR THE ASSESSING OFFICER TO DECIDE ABOUT THE IMPUGNED CONVERSION TRANSACTION ON WHOLESOME BASIS. HE FURTHER PLEADED THAT EVEN IF IT IS HELD THAT THE IMPUGNED ACTION OF THE LOWER AUTHORITIES IS NOT SUSTAINABLE, THE ISSUE BE RESTORED TO THE CIT(A) FOR FRESH EXAMINATION OF THE RELEVANT FACTS. 8. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE FOREGOING RIVAL PLEADINGS. APPEAL FILE INCLUDING CASE RECORDS COMPILATION OF JUDICIAL PRECEDENTS AS WELL AS ASSESSMENT ORDER PERTAINING TO ASSESSMENT YEAR 2014-15 TO 2016-17 (SUPRA) STANDS PERUSED. THE DEPARTMENT HAD ADMITTEDLY CARRIED OUT THE SEARCH IN QUESTION DATED 22.06.16 IN M/S MANI GROUP. WE MAKE IT CLEAR THAT WE ARE IN ASSESSMENT YEAR 2017-18 INVOLVING RELEVANT PREVIOUS YEAR 2016-17 I.E. THE YEAR OF SEARCH ITSELF. THE ASSESSEE HAS FILED ITS RETURN ON 18.11.17 ADMITTING TOTAL INCOME OF RS.2,67,70,740/-. THE ASSESSING OFFICER ISSUED SCRUTINY NOTICE(S) U/S 143(2) R.W.S. 142(1) OF THE ACT TO INTER ALIA EXAMINE VARIOUS ISSUES. WE MAKE IT CLEAR THAT THE I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 16 SOLE SUBSTANTIVE DISPUTE OF TREATMENT OF ASSESSEES INCOME FROM REAL ESTATE DEVELOPMENT BUSINESS TO THE TUNE OF RS.103,84,50,640/- UNDER THE HEAD CAPITAL GAINS OR BUSINESSES IS ONLY GERMANE TO THE INSTANT LIS. WE NOTICE FROM PAGE 4 PARA 6 ONWARDS IN RELEVANT ASSESSMENT ORDER DATED 30.12.18 THAT THE ASSESSING OFFICER CAME ACROSS THE ASSESSEES AUDITED STATEMENT OF INCOME AND EXPENDITURE INDICATING NET PROFIT/LOSS OF RS.13,11,24,470/- AS WELL AS BUSINESS LOSS TO THE TUNE OF RS.39135082/- ALONG WITH SALES CONSIDERATION AND TRANSFER EXPENSES FIGURES OF RS.529935632/- AND RS.464029807/-; RESPECTIVELY. HE WAS OF THE VIEW THAT SINCE THE ASSESSEE DEVELOPED REAL ESTATE, ITS ENTIRE RECEIPTS OF RS.1,03,84,50,640/- FORMING SUBJECT MATTER OF THE IMPUGNED ADDITION DESERVED TO BE TREATED AS BUSINESS INCOME UNDER CHAPTER IV OF THE ACT. HE THUS ISSUED HIS SHOW-CAUSE NOTICE TO THIS EFFECT. 8.1 THE ASSESSEE FILED REPLY TO THE ASSESSING OFFICERS FOREGOING SHOW-CAUSE NOTICE. IT INTER ALIA PLEADED THEREIN THAT IT HAD CONVERTED THE CAPITAL ASSET(S) REPRESENTING LAND/CAPITAL WORK-IN-PROGRESS RELATING TO IT PARK ACTION AREA II, NEW TOWN KOLKATA, RAJARHAT, WEST BENGAL TO STOCK-IN-TRADE (AS PER SCHEDULE 7 OF SCHEDULE 14 OF THE AUDITED ACCOUNTS) FOR THE RELEVANT PREVIOUS YEAR ENDING ON 31.03.2014. IT ALSO APPEARS TO HAVE QUOTED SECTION 2(47)(IV) R.W. SECTION 45(2) OF THE ACT THAT CAPITAL GAIN ARISING ON ACCOUNT OF SUCH CONVERSION HAVE TO BE CALCULATED IN THE YEAR OF TRANSFER THEREOF. THE ASSESSEES CASE IN LIGHT OF THE SAID CLINCHING STATUTORY PROVISION WAS THAT IT HAD OFFERED THE IMPUGNED INCOME OF RS.103,84,50,640/- AS CAPITAL GAINS AND NOT BUSINESS INCOME. ALL THIS FAILED TO CONVINCE THE ASSESSING OFFICER WHO WAS OF THE VIEW THAT THE ASSESSEE HAD RECOGNISED BUSINESS INCOME IN THE YEAR WHEN THE SALE HAD BEEN EXECUTED AND AFTER RECEIVING THE ENTIRE CONSIDERATION MONEY THEREBY HANDING OVER THE POSSESSION. HE THEREFORE WAS OF THE OPINION THAT THESE FACTS MADE IT CLEAR THAT THE ASSESSEES INTENTION ALL ALONG WAS TO CONSTRUCT THE IT PARK FOLLOWED BY SALE OF PLACES THEREIN AS BUSINESS VENTURE THAN A CAPITAL ASSET. HE ALSO TOOK NOTE OF THE ASSESSEES ADVANCES VIS-A-VIS CAPITAL WORK-IN-PROGRESS FROM THE PROJECTS INCEPTION AS A CLEAR I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 17 INDICATOR OF THE SAID INTENTION ONLY. THE ASSESSING OFFICER THEREFORE ASSESSED THAT THE ASSESSEES ENTIRE REVENUE FROM REAL ESTATE DEVELOPMENT HEREINABOVE TO BE TAKEN AS BUSINESS INCOME. THE CIT(A) HAS ADMITTEDLY AFFIRMED THE ASSESSING OFFICERS ACTION AS EXTRACTED IN PRECEDING PARAGRAPHS. 8.2 WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RELEVANT FACTS INVOLVED IN THE INSTANT LIS IN LIGHT OF THE RIVAL PLEADINGS. AFTER GIVING OUR THOUGHTFUL CONSIDERATION, WE FIND NO MERIT IN ASSESSEES FIRST ARGUMENT THAT THE IMPUGNED ASSESSMENT PROCEEDINGS ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND/SEIZED DURING THE COURSE OF SEARCH. ALTHOUGH LEARNED COUNSEL HAS TAKEN PAINS TO REFER TO VARIOUS CASE LAWS (SUPRA), THE FACT REMAINS THAT WE ARE DEALING WITH THE ASSESSMENT YEAR RELEVANT TO THE SEARCH CARRIED OUT IN ASSESSEES CASE ON 22.06.16 ONLY. THE ASSESSING OFFICERS ASSESSMENT ORDER DOES NOT INDICATE AS TO WHETHER IT HAD BEEN PASSED U/S 153A OF THE ACT. THE VERY FACTUAL POSITION CONTINUES IN THE CIT(A)S ORDER AS WELL. WE THUS GO BY SECTION 153A(1)(B) OF THE ACT CONTAINING THE CLINCHING STATUTORY EXPRESSION ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED. WE THEREFORE DECLINE THE ASSESSEES FIRST ARGUMENT TO CONCLUDE THAT WHETHER OR NOT ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF ABOVE-STATED SEARCH, THE LOWER AUTHORITIES COULD HAVE INITIATED ONLY SECTION 143(3) PROCEEDINGS PERTAINING TO THE YEAR OF SEARCH I.E. ASSESSMENT YEAR 2017-18 IN ISSUE BEFORE US. COMING TO THE SECTION 153A ASSESSMENT FRAMED IN EARLIER ASSESSMENT YEARS(SUPRA), WE OBSERVE THAT THE SAME ADMITTEDLY DOES NOT REQUIRE ANY ADJUDICATION ON OUR PART. THE ASSESSEE FAILS IN ITS FIRST SUBSTANTIVE ARGUMENT ACCORDINGLY. 8.3 WE NEXT COME TO ASSESSEES SECOND AND THIRD ARGUMENTS THAT BOTH THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS TREATING ITS INCOME FROM REAL ESTATE DEVELOPMENT OF RS.103,84,50,640/- AS BUSINESS INCOME THAN UNDER THE HEAD CAPITAL GAINS DECLARED AT ITS BEHEST. WE FIND FORCE IN ASSESSEES TWIN ARGUMENTS IN VIEW OF THE CLINCHING FACT THAT SECTION 153A ASSESSMENTS FRAMED IN I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 18 ASSESSEES CASES ITSELF FOR ASSESSMENT YEARS 2014-15 TO 2016-17; ALL DATED 30.12.18(SUPRA), HAVE CONSISTENTLY ACCEPTED ITS CONVERSION OF THE CAPITAL WORK-IN- PROGRESS TO STOCK-IN-TRADE AS ON 31.03.14. WE HOLD THAT THE LEARNED LOWER AUTHORITIES HAVE COMPLETELY MISCONSTRUED THE SETTLED FACTUAL POSITION IN ADOPTING VARYING STANDS IN ALL THESE ASSESSMENTS FRAMED ON THE SAME DATE I.E. 30.12.18. WE WISH TO REPEAT HERE THAT ONCE THE ASSESSEES CONVERSION OF CAPITAL WORK-IN-PROGRESS IN STOCK-IN-TRADE STOOD ACCEPTED IN THE SAID FIRST ASSESSMENT YEAR RELEVANT TO THE DATE OF CONVERSION I.E. 31.03.14 (SUPRA), IT IS NOT OPEN FOR THE DEPARTMENT TO DENY THE CONSEQUENCES FLOWING THEREFROM IN LATTER ASSESSMENT YEARS. MORE SO, WHEN SECTION 45(2) R.W. SECTION 2(47)(IV) MAKES IT CLEAR THAT THE CAPITAL GAINS ARISING FROM SUCH A TRANSFER; AFTER CONVERSION OF CAPITAL ASSETS INTO STOCK-IN-TRADE, ARISE FOR TAXATION ONLY IN THE YEAR OF TRANSFER OF THE RELEVANT CAPITAL ASSET. THIS TRIBUNAL IN (2002) 83 ITD 87 (KOL.) (SB) OCTAVIUS STEEL & CO. LTD. VS. ACIT HAS SETTLED THE LAW LONG BACK THAT EVEN THOUGH THE ALLEGED CONVERSION OF CAPITAL ASSET TO STOCK-IN- TRADE TOOK PLACE IN THE EARLIER ASSESSMENT YEARS, THE CAPITAL GAINS FROM SUCH CONVERSION WOULD BE CHARGEABLE IN THE YEAR OF TRANSFER THAN THAT OF CONVERSION. WE THUS HOLD THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACT IN THEIR RESPECTIVE ACTION(S) NOT ACCEPTING THE ASSESSEES STAND DECLARING THE IMPUGNED INCOME OF CAPITAL GAINS. 8.4 WE LASTLY ADVERT TO THE ASSESSEES ARGUMENT BASED ON LEGISLATIVE AMENDMENTS VIDE FINANCE ACT 2018 W.E.F. 01.04.2019 (SUPRA) AND OBSERVE THAT THE SAME ARE IN RESPECT OF TAX TREATMENT OF CONVERSION OF CAPITAL ASSET(S) TO STOCK-IN- TRADE NOT RELEVANT TO THE ISSUE BEFORE US. MORESO, WHEN WE HAVE ALREADY CONCLUDED THAT SINCE THE INSTANT LIS INVOLVES TAX TREATMENT OF CAPITAL WORK-IN-PROGRESS CONVERSION TO STOCK-IN-TRADE AS ON 31.03.2014 U/S 2(47)(IV) R.W.S. 45(2) OF ITS CAPITAL GAINS ARISING THEREFROM ASSESSED AS BUSINESS INCOME, THIS STATUTORY PROVISION CARRIES ONLY ACADEMIC SIGNIFICANCE. WE ALSO WISH TO MAKE IT CLEAR THAT THE LEARNED LOWER AUTHORITIES HAVE THEMSELVES BEEN VERY FAIR IN NOT RAISING ANY ISSUE OF FMV AND OTHER ANCILLARY ASPECTS. WE THEREFORE GO BY OUR PRECEDING DETAILED I.T(SS)A NO.53/KOL/2020 ASSESSMENT YEAR: 2017-18 M/S MAGUS BENGAL ESTATES LLP PAGE | 19 REOPENING AND DIRECT THE ASSESSING OFFICER TO ASSESS THE ASSESSEES INCOME IN ISSUE OF RS.1038450640/- AS CAPITAL GAINS AS PER LAW. 9. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOVE TERMS. ORDER IS PRONOUNCED IN THE OPEN COURT ON 22.10.2020. SD/- ( J. SUDHAKAR REDDY ) SD/- (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER /KOLKATA; / DATE: 22/10/2020 RS / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER ASSISTANT REGISTRAR, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. THE APPELLANT- M/S MAGUS BENGAL ESTATES LLP 2. THE RESPONDENT- ACIT, CENTRAL CIRCLE-3(2), KOLKATA. 3. ( ) / THE CIT(A), KOLKATA [SENT THROUGH EMAIL] 4. / CIT 5. , , / DR, ITAT, KOLKATA [SENT THROUGH EMAIL] 6. [ / GUARD FILE.