B.C. Meena, Accountant Member

1. This misc. application is filed by the assessee. The assessee has submitted in the application u/s 254(2) as under :

1. The tribunal while deciding the only issue in this appeal is paras (4) & (5) in toto followed the order of the jurisdictional high court in the case of Splendor Construction Pvt. Ltd. Copy of the Tribunal Order dt: 13.10.2010 is enclosed herewith as Annexure A-I.

2. That the facts and circumstances and the issue in the above were similar to the present appeal except that the surplus in Splendor Construction Pvt. Ltd. case was treated as business profit but the CIT (A) and ITAT treated the same as short term capital gain.

3. That however in the present case the A. O. as well as the CIT (AO) treated the surplus as business profits. The ITAT following the High Courts order should have treated the surplus in the present case as short term capital gain.

4. Since as High Court Order the surplus to be regarded as Short Term Capital Gain. The ITAT should have held so while dismissing the assessees appeal and not business profit. To this extent the order of the Tribunal paras (4) & ( 5) may be rectified accordingly.

2. We have heard both the sides on the issue. In this case, the ITAT has decided the issue by following the decision of Honble jurisdictional High Court in the case of Splendor Construction P. Ltd. vs. ITO in ITA No.662/2009 dated 16 September , 2009 in toto. In that case, the property was acquired and shown as stock-in-trade up to 31.03.2002 and thereafter it was converted into capital asset and the same was sold after around 81/2 months. The bonafides of conversion were not in question. In that case, the Honble High Court held that since the conversion of the property into the capital asset was w.e.f. 1.4.2002 and on that day, the asset ceased to be stock-in-trade and from that date only, the asset was treated as capital asset and the surplus as short term capital gain. In the assessees case, Assessing Officer as well as CIT (A) treated the profit arising on sale of shares as business profit while the assessee claimed it to be income as long term capital gain. The issue regarding period of holding could have been covered by the decision of Splendor Construction P. Ltd. But the conversion of shares from stock-in-trade to investment was held by authorities below as malafide. No findings on this issue have been made by ITAT and without deciding the same, the decision of Splendor Construction P. Ltd. could not be applied in toto. In view of these facts, there is an apparent mistake in the order. In the interest of justice, we recall whole of the order. We direct the registry to fix the appeal for regular hearing in due course.

3. In the result, the M.A. filed by the assessee stands allowed.

Order pronounced in open court on this 9th day of November, 2011.