Section 45(2)

1. Simplex Construction Ltd. acquired land on 01.02.1985 for ` 1,50,000 (stamp duty value as
on that date ` 2,50,000) for construction of its own office and interior decoration workshop.
The fair market value (FMV) of the land as on 01.04.2001 was ` 7,50,000. The company
decided to go into a real estate business on 01.04.2010 (FMV of the said land as on
01.04.2010- ` 13,00,000) and intended to use the said land for the real estate business. In
the Board meeting held on 31.01.2011, the company resolved that the land (FMV as on
31.01.2011- ` 13,80,000) would be used for the construction of ten HIG flats of equal space,
quality and dimension. It was decided to revalue the land and it was being shown under the
head current assets in the books at a value of ` 9,00,000.
The company completed the construction in October 2021 and the cost of construction of
each one was amounted to ` 12,00,000. It sold eight flats @ ` 16,00,000 each in between
December 2021 to March 2022.
Discuss the tax treatment.
[Given CII: 2001-02: 100, 2010-11: 167, 2021-22: 317]