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Sec 45(2) conversion of capital asset into SIT

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Mohd Khalid

493 Points Posted on 04 October 2020

Friends what is the legal procedure to convert capital asset into stock in trade?
For ex:- I have purchase 5 house property which is capital asset on 1.04.2001 and now today I decide to do real state business and want to convert these property into stock in trade so how can I convert these house property into stock in trade

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Quick Summary

This discussion explores the legal procedure for converting a capital asset, such as property purchased as an investment, into stock-in-trade for a real estate business. It clarifies that under Section 45(2), the conversion is based on the fair market value on the date of conversion, with cost indexation calculated up to that point. Any capital gains arising from this conversion will be considered in the year the stock-in-trade is eventually sold.

ayusmita

Tax consultant

5895 Points Posted on 05 October 2020

Read section 45(2) for proper knowledge of conversation
Investments in capital gain returns by the assessee will be utilized for computation in the year wherein such converted capital asset is sold.
The complete value will be determined as fair market value as on the date of conversionC
cost indexation will be computed until the year of conversion