Sannidhi Sriramachandra Murthy (HUF) v. The Assistant Commissioner of Income Tax, Circle-1

Parties Involved

Facts Summary

The assessee, Sannidhi Sriramachandra Murthy (HUF), filed an appeal against the order of the Principal Commissioner of Income Tax, Visakhapatnam, who had disallowed deductions claimed under sections 54B and 54F of the Income Tax Act. The assessee had converted agricultural lands into stock-in-trade on 10.03.2010 and sold the stock-in-trade during the financial year 2012-13. The assessee claimed capital gains tax based on the fair market value on the date of conversion and invested in agricultural lands and residential property within the specified time limits. The Principal Commissioner of Income Tax had disallowed the deductions, considering the date of conversion as the date for reckoning the investment period. The assessee argued that the date of reckoning should be the date of sale of the stock-in-trade. The Tribunal held that the deductions under sections 54B and 54F should be allowed based on the date of sale of the stock-in-trade.…

Legal Issues

• 1. Whether the time limit for making the investment is to be counted from the date when the assessee converted the capital asset into stock-in-trade or when the stock-in-trade is sold by the assessee.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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