Section 2(14), read with section 37(1), of the Income-tax Act, 1961 - Capital gains

IT : On dissolution of firm, partners agreed to take over plots of land as co-owners and as capital assets; profit on sale of said plots would be treated as capital gain instead of business income
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[2014] 52 taxmann.com 491 (Bombay)
HIGH COURT OF BOMBAY
Arvind Shamji Chheda
v.
Commissioner of Income-tax, Mumbai City X*
S.C. DHARMADHIKARI AND A.K. MENON, JJ.
IT REFERENCE NO. 268 OF 1997
SEPTEMBER  12, 2014
Section 2(14), read with section 37(1), of the Income-tax Act, 1961 - Capital gains - Capital assets (Capital gain v. Business income) - Assessment year 1988-89 - Assessee and another partner of a construction firm purchased plots - A building was to be put upon said land but land remained vacant as nothing was done - On dissolution of firm, partners agreed to take over plots of land as co-owners and as capital assets - Whether since property did not seem to be stock in trade by execution of dissolution deed, profit on their sale would not be treated as business income; same was to be treated as capital gains - Held, yes [Paras 25 and 26] [In favour of assessee]