Suppose a capital asset is converted into stock in trade in FY ending on 31-03-2016. Thus, deemed capital gains is calculated as on 31-03-2016.
Now the company wants to make a provision for future expenses and want to claim the same as cost of improvement.
Is it viable?
Once the capital asset is converted to stock,additional expenses incurred after the conversion date can not be claimed as cost of improvment. The charecter of the asset has changed from capital to revanue hence such expense should be charged to P&L ( i.e they fall in PGBP)
BHUPINDER SHAH AND COMPANY
New Delhi
CA Inter
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Vakilsearch.com
Chennai
CA Inter
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