Sunday, 23 December 2018

ITAT : Reckons land-stock conversion date from building plan application date, not IOD issuance date

Mumbai ITAT accepts Revenue’s claim that the date of conversion of capital asset (plot of land) into stock-in-trade as envisaged u/s 45(2) shall be reckoned from the date when assessee-builder filed an application for building plan sanction before the Municipal Corporation (i.e. in 1994), and not when IOD was actually issued (i.e. in 1997); Assessee had decided to use portion of his land holdings for developing a housing project, rules that “what is relevant to determine the date of conversion is the intention of the assessee to commercially exploit the property which is on 02-02-1994.”; On year of taxability, ITAT upholds assessee’s stand that the capital gains shall be taxable in the year in which the project was completed and flats were ultimately sold, rejects Revenue’s stand that the LTCG shall be chargeable to tax proportionately on the basis of advance received from customers; Separately, ITAT allows assessee’s claim u/s. 80-IB(10) despite no OC issued by Municipal Corporation; Lastly, ITAT rejects assessee’s stand that interest earned on FDR was a business receipt as it had parked surplus funds generated from business in banks in order to earn interest income and reduce construction expenses, upholds AO’s action of assessing it as ‘income from other sources’.:ITAT 

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