Conversion of capital asset into stock in trade
I converted my capital asset (PURCHASED IN FY 11-12) into stock in trade in FY 2014-15 but I kept the value of stock in trade at the book value of asset.Now when I sold that stock in FY 18-19 I need to calculate my CG and PGBP.For CG Its straight a's per section 45(2) but for PGBP If I calculate sale price of stock less stock(which I kept at the book value of asset) that will inflate my profits.Can I claim difference of FMV and book value of asset as other allowable deduction now.
Replies (1)
Under Section 45(2), you must calculate Capital Gains using the Fair Market Value (FMV) at the time of conversion as the sale consideration, and use that same FMV as the cost for calculating Business Income upon the final sale. Using the book value instead of the FMV is not in accordance with the Act, and the difference is generally not an allowable deduction.
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