Conversion of stockin trade into capital asset?

Merely holding the said flats as investments will not attract capital gains tax. Only on actual sale of these flats, CG tax would be attracted.

Thanks for that reply.

But if I may ask further, that does withdrawl of such flats by partners as drawings tantamount to a taxable transcation or is the implication otherwise? 

E.g: There are two partners in a firm. They have five flats as 'stock in trade' as that is their business. On a said date they convert these flats(inventory) into investments. And that after, say a few months later, a partner takes two flats as drawings. Now, what would be the tax implications of the same?

Possibilities:

1. That it would be just a sale and the firm needs to pay VAT etc after debiting the partner's capital A/c?  OR

2. It would be a transaction of the nature of transfer of Capital Asset and Capital Gains is levied on the part of the partner? OR

3. When the flat is taken over by the partne, the construction value of such flats is debited to the Partner's Capital A/c and there is no taxation whatsoever?

Imp: There is no dissolution.

Thanks.