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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