Conversion of capital assets into stock in trade
But in vice versa situation i.
Tax treatment of Capital Asset Converted into Stock in Trade | TaxBaniya
If an assessee is in the business of real estate and on closure of his business he retains the existing stock in trade of immovable properties of the business with him and holds it as investment then it will become his capital asset from the time of closure of his business. Similar case can also happen in case of a business of trading in shares.
Even during the continuation of the business the assessee may transfer some of his stock in trade into his capital asset by deciding to hold it as an investment and can sell the same at a later stage and can pay tax on the profit as capital gain instead of business profit.
In such cases, there will not be any capital gain at the time of conversion and if the assessee sells such converted asset at a later date, the profit will certainly give rise to capital gain and in order to ascertain whether such profit is long-term capital gain, the period of holding would have to be reckoned from the date of acquisition of the asset as stock in trade and not from the date of conversion into capital asset, as section 2 42A does not lay down that the holding of the asset for the required period has to be as capital asset.
Conversion Ratio
Can once converted Capital Asset Land into Stock in trade can be convert again into Capital Asset. If Yes then what are the tax implications. Now in example of Mr Adinarayana Rs.
Please clarify on the taxation aspect of conversion of agricultural land as stock in Trade, esp. On the date of conversion of stock-in-trade into capital asset, the profit is chargeable as a business income. Is it possible to follow such tax planning during the continuance of the real estate business. Like hold the asset as stock for some period and then strength candles buy/sell forex indicator download as capital asset and dispose and pay capital gain tax based on period of holding.
This is with respect to the conversion of stock in trade, let us assume that, If an assessee is holding Equity shares as stock in trade and proposes to convert them as capital asset, it is mentioned that depending on the period of holding it will be subjected to tax if there are short term capital gains and if there are long term capital gains they will be exempt, if STT is paid.
For example ABC Ltd. No capital Gain arises on conversion of stock in trade into capital asset. Go through the case laws links provided above by the Admin. Your email address will not be published. It seems you have Javascript disabled in your Browser. In order to submit a comment to this post, please write this code along with your comment: Income Tax Articles News Judiciary ITR PMGKY Deductions Section 80C Section 80D Section 80DD Section 80DDB Section 80EE Section 80EE Section 80G Section 80GG Tax Planning Notifications Circulars Instructions Orders Press Release Budget Conversion of capital assets into stock in trade Income Tax Articles News Notifications Service Tax Articles News Notifications Excise Duty Articles News Notifications Custom Duty Articles News Notifications Budget S.
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