captial gains

capital gain on conversion of fixed assets into stock in trade is chargeble to tax in the year in which stock in trade is sold.

u have to compute the value of capital gain in year of actual conversion but that value is chargable to tax in the year in which stock in trade is sold and at the rate prevelling in that year

 ok thank you for the answer but you did not tell me the reason why they do so?

when gain had accrued then it must be taxed at that rate but we are taxing it at the rate of some other period

this is because capital gain arises from conversion of fixed asset into stock in trade is a NOTIONAL GAIN NOT ACTUAL GAIN. at the time of conversion u do not receive any amount of money in u r hand. but when u actually sell such stock, it is generally over and above its fair value at which u have brought into the business. in that year, u have some money portion in u r hand to pay tax. i think so. do u agree?