COMMISSIONER OF INCOME TAX Vs. INDU BALA CHHABRA

JUDGEMENT

(1.) THIS is an appeal under S. 260A of the IT Act, 1961 (in short "the Act"), from the order passed by the Tribunal, Delhi Bench "B", New Delhi (in short "the Tribunal"), on 31st Jan., 2002, in ITA No. 91/Delhi of 1995, pertaining to the asst. year 1991 92.

(2.) THE background facts, in brief, are : The respondent, hereinafter referred to as the assessee, derives income from medical profession. In her return for the relevant assessment year she declared an income of Rs. 1,14,330 as income from profession. During the course of assessment proceedings, the AO noticed that during the previous year the assessee had received a sum of Rs. 26,32,000 on the sale of some shops and flats but had not declared any capital gains on the plea that the sale consideration had been deposited in the specified capital gains bank account in terms of S. 54(2) of the Act. Rejecting the stand of the assessee that the property was residential and the entire sale proceeds having been deposited in the specified account, no capital gain was exigible to tax, the AO held that the amount received by the assessee on the sale of the shops was to be charged to tax under S. 45(2) of the Act, as the assessee had converted the capital assets (the shops and flats) into stock in trade and the same were sold in the relevant previous year. Estimating the market value of the shops, converted into stock in trade, at Rs. 32 lakhs, the AO computed income on this account at Rs. 32,00,000. Aggrieved, the assessee preferred appeal to the CIT(A), who held that neither the AO was justified in invoking S. 45(2) of the Act nor the claim of the assessee under S. 54F of the Act was tenable. The CIT, however, held that the construction of shops and the flats by the assessee was an adventure in the nature of trade and thus income from the sale of the shops was to be taxed as profits and gains of business, which was computed at Rs. 22,85,820. Not being satisfied with the relief granted by the first appellate authority, the assessee preferred further appeal to the Tribunal. The Tribunal accepted the stand of the assessee by observing as follows :

(3.) WE are unable to persuade ourselves to agree with learned counsel for the Revenue.