Conversion of stock in trade into capital asset
This query is : Resolved
shivani verma
(Querist)
15 April 2015
I have a company having real estate business as main objective and leasing business as secondary objective.
I want to convert certain land and building held as stock in trade into capital asset.
My query is whether can i give converted land and building on lease or should i hold it as stock in trade itself for giving it on lease???
I want to convert certain land and building held as stock in trade into capital asset.
My query is whether can i give converted land and building on lease or should i hold it as stock in trade itself for giving it on lease???
shivani verma
(Querist)
15 April 2015
pl resolve my query as soon as possible as it is urgent.
CA PARAS BAFNA
(Expert)
15 April 2015
Your company can lease land and building which are being shown as stock in trade.
.
There is no provision in the Income Tax Act showing any tax incidence on conversion of stock in trade into a capital asset.
.
On such conversion, however, the courts have opined differently in regards to the date of acquisition of such asset.
.
Transfer the stock into capital assset, but to avoid any litigation at the time of sale of such assets, take the conversion date as its date of acquisition.
.
.
There is no provision in the Income Tax Act showing any tax incidence on conversion of stock in trade into a capital asset.
.
On such conversion, however, the courts have opined differently in regards to the date of acquisition of such asset.
.
Transfer the stock into capital assset, but to avoid any litigation at the time of sale of such assets, take the conversion date as its date of acquisition.
.
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shivani verma
(Querist)
16 April 2015
sir my query is after conversion of stock in trade into capital asset whether i would be able to give converted land on lease which is now my capital asset and not my stock in trade?
CA PARAS BAFNA
(Expert)
16 April 2015
Yes , you can give it on lease.
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