Conversion of capital asset into stock in trade

Krishna Prasad (Partner) (260 Points)

17 September 2014  

MY CLIENT IS A PRIVATE LIMITED COMPANY. IT HAS CAPITAL ASSETS IN THE BALANCE SHEET. ON 01.04.2012  IT TRANSFERRED THE CAPITAL ASSETS INTO STOCK IN TRADE AT BOOK VALUE. DURING THE FINANCIAL YEAR:2013-14, IT SOLD THE CONVERTED CAPITAL ASSET. AT THE TIME OF TRANSFER THERE IS NO CAPITAL GAIN BUT DURING THE FY:2013-14, THERE IS CAPITAL GAIN AS WELL AS BUSINESS PROFIT.

 

NOW MY QUESTION IS HOW TO GIVE TREATMENT TOWARDS LONG TERM CAPITAL GAIN AND BUSINESS PROFIT. ENTRIES REQUIRED. 

PL SUGGEST ME.