Capital gain on conversion of capital asset into stock

This query is : Resolved

dholyesv (Querist)
Follow

17 December 2010 I have following querry
An individual owns a land as capital assets for 2 years. He and two other have formed the partnership firm for development of land.
The indivial introduced the land to partnership business as capital
here the capital asset converted into stock in trade. But the entity is changed.
My query is about the taxability under capital gain short term or long term...
In which year taxability arises? year of conversion or year of sale of flats?
What will be the effect on taxability if the individual on his own has developed the land

CA. R. B. SAH

CA. R. B. SAH (Expert)
Follow

17 December 2010 Capital Gain shall be taxable in the year of sale but period of holding shall be reconed from the date of acquisition to the date of conversion.

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
Follow

18 December 2010 here capital assets is not converted in stock in trade but investment is made of a capital assets the book value (as recorded in P' firm of the land ) sale be the sale consideration and the year when such assets is converted . indexation will NOT be available as the land is held for 2 years giving rise to short term Capital Gain .

reference section 45 (3)

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Summarize this with AI

ChatGPT Perplexity Claude Google AI Grok