INCOME TAX ACT,1961

Section 55A(a) Section 142A

Capital gains - Computation of - Conversion of agricultural land into stock in trade - Validity of reference to DVO

Assessee converted his agricultural lands to stock-in-trade as on 1-4-2010 followed by transfer thereof in the concerned assessment year giving rise to chargeability of income tax provisions in the latter assessment year 2014-15 in light of section 45(2). AO made reference to DVO under section 142A for assessment year 2014-15. Assessee contended that section 55A stood amended with effect from 1-7-2012 whereas assessee had converted his agricultural lands to stock-in-trade very well before i.e., with effective from 1-4-2010. The amendment to section 55A(a) is not retrospective but carries prospective effect only and, therefore, reference to DVO was invalid. CIT(A) upheld assessee's plea revenue challenged this. Held: Section 55A, even if it is held to be applicable would come into play for computation of assessee's capital gains as on the date of conversion of agriculatural land to stock-in-trade coming to 1-4-2010 whereas the correct corresponding statutory provision applicable as in the instant case was section 142A(1) only. That being the case, CIT(A) erred in treating section 142A(1) reference to DVO as not maintainable by drawing analogy from amended proviso to section 55A(a) which itself was not applicable. Therefore, addition was deleted.

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