Apr 17, 2012
Section 50C of income tax act is not applicable to a builder as his assets as plots and buildings are his stock in trade and not capital assets.
IT : Section 50C not applicable to sale of plots by a builder since plots are his stock-in-trade and not capital assets
• Section 50C uses the word 'capital asset'; for applicability of section 50C one of the essential requirements is that land or buildings sold should be capital asset; stock in trade has been excluded from the definition of capital asset by sec. 2(14).
• Investment in purchase and sale of plots by a builder who is indulged in selling buildings is ancillary and incidental to his business activity; 'stock-in-trade' includes all such chattels as are required for the purposes of being sold or let to hire on a person's trade; [See also • Addl.CIT v. Puttu Coal (P.) Ltd. (1983) 140 ITR 740 (Bom) where the assessee was money lender, who purchased a ship in satisfaction of his major portion of outstanding loan and the ship was considered as stock in trade of the assessee's money lending business].
• In the present case, assessee has treated plots of land as stock in trade in its balance sheet. -  20 taxmann.com 381 (Allahabad)
Tags-section 50c,section 50c of income tax,section 50c of income tax act,income tax section 50c