ALPHA ASSOCIATES Vs. DEPUTY COMMISSIONER OF INCOME TAX
INCOME TAX APPELLATE TRIBUNAL
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M.K. Chaturvedi, Judicial Member -
(1.) THIS appeal by the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-XIII, Bombay (Sri P.S. Kalsian) and pertains to the assessment year 1990-91.
(2.) Briefly the facts :
The assessee is a partnership firm comprising of five partners. This firm was constituted by an Indenture of Partnership dated the 10th day of January, 1985. The business was said to have commenced from 28th January, 1984.
For the relevant assessment year, the assessee has down a loss computed under the head "business income" amounting to Rs. 91,12,980 and a profit under the head "capital gains" on the sale of land to Mahanagar Telephone Nigam Ltd. (hereinafter called "MTNL") amounting to Rs. 1,18,66,907. This amount was arrived at after claiming deduction under Section 48(2) of the Income-tax Act, 1961 (hereinafter called the "Act"). Thus the income disclosed for the year was under two heads, viz. business loss and the profit under the head capital gains. The net taxable income worked out by the assessee-firm was at Rs. 26,16,299.
(3.) BEFORE the Assessing Officer, two questions were raised for his consideration :
(i) Whether the assessee's claim that the land in question disposed of by the assessee is a capital asset and not a business asset, i.e., stock in trade?
(ii) If the answer to Issue No. 1 is in the affirmative (it is the capital asset), then whether the assessee could bifurcate this sale consideration in respect of the capital asset into two parts - one in the nature of a capital receipt and the other in the nature of business receipts, thereby claiming deduction, under Section 48(2) and also business loss?;
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