K.T. THAKORE, A.M. This appeal which relates to asst. yr. 1976-77 is filed by Department in which relevant ground reads as follows: " ld. CIT(A) has erred in law and on facts in holding that no capital gain arose to assessee in transaction of conversion of capital asset into stock- in-trade and contribution of same in form as capital. Consequently, ld. CIT(A) has erred in deleting Rs. 2,41,000 on this count." assessee is individual. original assessment was completed under s. 143(1) of Act and thereafter proceedings were reopened under provision of s.147 read with s. 148 of Act. original assessment was completed on basis of total income of Rs. 8141 as declared by assessee. ITO in course of re-assessment proceedings noticed that assessee had transferred one plot of land admeasuring 2008 sq. yds. situated at shekhpur Khanpur to firm styled M/s. Siddharth & Co. as his capital contribution and value of said land determined at Rs. 2,41,000 stood credited to assessee s account with said firm. original cost of said land was Rs. 30,160. upto 14th March 1975 and that said land was received by assessee by way of gift from his father Ramanlal Gajjar. ITO further found that value of said lands as on 14th March 1975 was Rs. 30,160. Therefore he proposed to tax difference between Rs. 2,41,000 and Rs. 30,160 or was Rs. 2,10,840 as long term capital gain. assessee objected to proposed addition as capital gains on ground that what assessee had transferred was stock in trade which is not capital asset. Since value of stock in trade as contributed in partnership was same no addition was called for. That apart assessee has converted his land into stock-in -trade on 15th March 1975 by crediting his personal account with market value at Rs. 2,41,000. This contention stood rejected by ITO on ground that whether particular item is stock-in -trade or not. It was for assessee to show evidence that he had done transactions regarding purchase and sale of that type of stock-in-trade after land was so converted. assessee has neither sold any potion of land out of said land nor had he purchased another land. Therefore relying on decision of their Lordships of Gujarat High Court in case Anasuyaben (deceased) (Unreported) (P67 U.R.D. Guj) ITO held that said land continued to be capital asset till it was transferred. In alternative it was contended that cost of land should be adopted on basis of revaluation i.e. market value of land as on 15th March 1975. This contention was also rejected by ITO who took view that said transaction has resulted into transfer attracting provision of s. 2(47) of Act and accordingly proposed that sum of Rs. 2,10,840 be brought to tax as capital gains subject to statutory deductions. He then submitted above proposition for approval of IAC under provisions of s. 144B of Act who apart from reasons set out by ITO, relying on decision in case of CIT vs. Kartikey V. Sarabhai (1981) 24 CTR (Guj) 184: (1981) 131 ITR (Guj) upheld action of ITO. Being aggrived assessee carried matter in appeal before CIT(A) contending in first place that ITO ought to have accepted conversion of capital asset into stock-in-trade and as consequence held that said transaction had not resulted in any taxable capital gains. In support of this contention reliance was placed on affidavit dt. 13th May 1975 which were duly supported by entries in personal books of account maintained by assessee,. According to CIT(A) entry was made on 19th Nov. 1974 bringing said plot of land in books of accounts of assessee and valuing same at Rs. 2,10,840 as per Valuer s report dt 5th June 1974. Again entry was made debiting said plot of land into stock-in-trade and crediting corresponding account styled Shekhpur Khanpur account. assessee has further stated narration that land was attributed for carrying on business of construction of lands etc. adjustment was also made at time of contributing said land as stock in trade to said firm of Siddharth and Co. contribution of lands was at Rs. 2,41,000 as stated earlier. above fact was sought to be supported by Partnership deed and statement recorded by ITO on this point. Thus according to assessee in view of decision in CIT vs. Bai Shirinbai K. Kooka (1962) 46 ITR 86 (SC) noting was taxable when plot of land was converted into stock-in-trade and no charge to capital gain could be levied when said stock in trade was contributed as capital in said firm. This contention found favour with CIT(A) who deleted addition as made by ITO under head long term capital gains. Being aggrieved revenue has come up in appeal before us. ld. Departmental representative relying on order of ITO submitted that conversion into stock in trade was made believe affair and contribution of alleged stock in trade into firm was merely devise. In this connection it was pointed out that Siddharth & Co. comprised of three partners, assessee. his son and his son s wife. Again Act of conversion of stock in trade was merely supported by certain entries which are in nature of self serving statements. As consequence according to ld. departmental representative what was contributed in fact and truth was capital asset which was exigible to capital gains in view of decision in case on Sunil Siddharthbhai vs. CIT (1985) 49 CTR ((SC) 172:(1985) 156 ITR 509 (SC). Shri Patal on other hand pointed out that CIT(A) has come to right conclusion in holding that assessee had converted capital asset into stock-in-trade and as such transaction was out of mischief of s. 45 read with s. 2(47) of Act. Shri Patel pointed out that assessee had made conversion by filling affidavit and on that basis entries made in books of accounts and this fact was also set out in deed of partnership. There was thus contemporaneous evidence to support act of conversion. Again conduct of assessee was also relevent in asmuch as assessee after converting said land in to stock-in-trade and therafter contributing said land to firm had undertaken construction activity through firm. number of flats were construted and were sold by said firm, details of which were placed before authorities below as also before. us. firm was accepted as genuine firm and was granted registration by ITO. Again facts in present case were materially different than those obtained in case of Anasuyaben (supra). In that case assessee was housewife who had recorded act of conversion in affidavit. land so converted was sold as land. There was no other instance of business carried on ' by her and therefore in absence of any contemporaneous evidence their Lordships were pleased to reject claim of conversion of capital asset into stock-in-trade. In instant case however assessee was carrying on business in timber. affidavit was subject to cross examination. assessee had developed said land through partnership by contruction of several flats which were sold and profit thereform was offered for taxation by firm. Thus there was business carried on by assessee through firm and through organisation of firm. In this situation act of conversion into stock-in-trade was rightly accepted by CIT(A). It was also submitted that decision in Sunil Siddharthbhai case (supra) has no application. That apart when firm was accepted as genuine firm and transactions undertaken by said firm have not been challenged observation in para 20 of said judgment were not applicable to facts of case. We have considered rival submissions. main controversy before us is whether assessee could be said to have genuinely converted land held by him into stock-in-trade. As result whether contribution as capital made t o firm was that of stock-in-trade which is not capital asset or otherwise. facts which we have discussed above clearly show that land in question were obtained by assessee by way of gift from his father. said land was converted into stock in trade on 15th March 1975 and it was brought into books and thereafter land which was converted into stock in trade was contributed by way of capital contribution in said firm. Apart from entries in books, affidavit there is also material evidence in form of averment in deed of partnership recording said conversion. Further it is noticed that assessee converting land into stock in trade and contributing same to firm had taken follow up action by carrying on business of development of land, construction of flats and sale of flats through firm in which he was partner. transactions entered into by firm viz. construction of flats and sale thereof from year after year has not been disputed and firm has been allowed registration by treating same as genuine firm which would go to show that transaction recorded by it represent genuine transaction. decision in Anasuyaben s case (supra) has been rightly distinguished on various aspects which we have set out earlier. Therefore on facts of case we do not see any reason to interfere with decision of CIT(A). We accordingly uphold his decision and dismiss this appeal. *** INCOME TAX OFFICER v. ANUBHAI R. GAJJAR