Capital gain

When the assessee wants to carry on a Business of an Item which he has capitalised it, then he shall have to convert the Fixed Asset into Stock in Trade and then sell the Stcok. You will understand it better after going through the below example:-

For Eg : Mr. A has 3 Freehold Properties in his Balance Sheet. Now Mr. A wants to carry on the Business of a Land Developer. Then the Land shall be converted into Stock in Trade, so that Mr. A can develop and sell the Land.

Regards,

Devendra K

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Mrs. Z got  lots of jewellery on the occassion of her marriage... and many others on other ocassions....

it was shown as an capital asset...in her balace sheet..

Now she wants to open a jewellery shop of her own...with her jewelleries...

Now all the capital assets are converted into stock in trade....

if she sells the jewellery...the revenue exceeding the FMV....the the excess amount will be treated as business gain??

only at the time of convertion of asset into trade the indexation will be taken into the consideration??

Originally posted by : Aryan Singhania
	Mrs. Z got  lots of jewellery on the occassion of her marriage... and many others on other ocassions.... it was shown as an capital asset...in her balace sheet.. Now she wants to open a jewellery shop of her own...with her jewelleries... Now all the capital assets are converted into stock in trade.... if she sells the jewellery...the revenue exceeding the FMV....the the excess amount will be treated as business gain?? only at the time of convertion of asset into trade the indexation will be taken into the consideration??

after conversion, and payment of capital gain tax, any income/ loss would be normal business income / loss.

if the cost is 10lacs and fmv is 12lacs...she sells it to 15lacs...

then 2 lacs is gapital gain....3 lacs is business gain???

agreee with mr shrama