Can a capital asset be treated as stock in trade by a real estate company?

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: ‘C’ NEW DELHI
BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER
AND
MS SUCHITRA KAMBLE, JUDICIAL MEMBER
(THROUGH VIDEO CONFERENCING)
I.T.A. No. 262/AGRA/2016 (A.Y 2012-13)

The Assistant Commissioner of
Income Tax, Circle-2(1),
Agra
(APPELLANT)

vs

M/s Global Heritage venture
Ltd.
12, Ring Road, Lajpat Nagar-
IV, New Delhi
AACCK9842M
(RESPONDENT)

Appellant by Ms. Sunita Singh, CIT DR
Respondent by Sh. Sudesh Garg, Adv

Date of Hearing 06.09.2021
Date of Pronouncement 01.10.2021

ORDER

Firstly, we are taking up the appeal for A.Y. 2012-13. The assessee filed return of income for Assessment Year 2012-13 on 31/3/2014 declaring the total income of Rs. 38,31,080/-. The original assessment was framed u/s 143(3) of the Income Tax Act vide order dated 27/3/2015 thereby assessing total income at Rs.121,70,39,930/-

2. We have heard both the parties and perused all the relevant materials available on record. The CIT(A) has given a clear finding that the construction of hotel as capital work in progress was accepted by the Revenue for Assessment Year made u/s 153C read with Section 143(3) of the Act for Assessment Year 2007-08 to 2009-10 as well as for Assessment Year 2010-11 and 2011-12. Thus, the continuous stand of the revenue was these are work in progress treated to be as capital asset and not as stock-in- trade.

3.As regards Ground No. 2, the Ld. DR submitted that the CIT(A) erred in deleting the addition of Rs.8,57,25,871/- ignoring the fact that the assessee has shown interest of Rs. 8,57,25,871/- in the cash flow statement whereas in the profit and loss account only Rs.38,31,079/- has been shown. The Ld. DR submitted that the Assessing Officer has rightly added the interest account in the income of the assessee as share of the disputes parties in the interest.

4. In result, both the appeal of the Revenue are dismissed.
Order pronounced in the Open Court on this 01st Day of October, 2021

Please find attached the enclosed file for the full judgement