Dear friends....
A - real estate business men - converted his cap. Asset(i.e.land) into stock in 1.4.99... converted the stock into cap. Asset in 1.4.2002...
Sold the land in 12.12.2002..... ST or LT???
C.Balaji (Learner) (1867 Points)
11 February 2010Dear friends....
A - real estate business men - converted his cap. Asset(i.e.land) into stock in 1.4.99... converted the stock into cap. Asset in 1.4.2002...
Sold the land in 12.12.2002..... ST or LT???
Max Payne
(employed)
(2569 Points)
Replied 11 February 2010
Hi,
I hope this is not another twisted case law dug up, buddy..... :)
OK, simple approach says,
1. conversion of Capital asset into stock in trade is a transfer
2. Such transfer however, shall be taxed only in the year in which the converted stock in trade is sold, i.e.,2002-03
3. Land has ceased to be a capital asset once it is converted into stock in trade, and whether it is LT or ST depends on the period for which it is held as a capital asset, whether more than 36 months.
4. Indexation will be available upto the year of conversion
Now what is the answer?
Amir
(Learner)
(4016 Points)
Replied 11 February 2010
Dear Balaji,
I wanna say exactly what Brother G.K.has said, u do this everytime, first u ask such a simple looking question & thereafter u reveal the answer with an unexpected judgement....
But, G.K. will agree - it's Fun............
I must say the judgements u quote they r so unexpected - it's probably one of those cases where I like when some one proves me wrong:))
Now tell us Brother.............
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 11 February 2010
None of them.... Neither ST nor LT
C.Balaji
(Learner)
(1867 Points)
Replied 11 February 2010
Dear friends...
please see this case...
Splendor Constructions (P.) Ltd.v. Income-tax Officer, Ward 9(2), New Delhi- IT Appeal No. 325 (Delhi) of 2007- [Assessment year 2003-04]- October 24, 2008 and reported in (2009)-27-SOT-39(Del)
Section 45, read with sections 2(29A) and 2(42A) of the Income-tax Act, 1961 - Capital gains - chargeable as - Assessment year 2003-04 - Whether for ascertaining as to whether a capital asset is a ‘short-term capital asset’ or a ‘long-term capital asset’, period for which said asset is held by assessee as capital asset alone has to be reckoned - Held, yes - Assessee company was engaged in business of developing and selling freehold immovable properties - In financial year 1998-99, assessee company acquired a property i.e. land for a certain consideration and same was subjected to development in financial years 2000-01 and 2001-02 incurring certain expenditure - Cost of acquisition of said property along with development expenditure incurred in respect thereof was shown by assessee company as its stock in trade in balance sheet upto 31-3-2002 - As on 1-4-2002 said property was converted by assessee company into investment and same was sold on 12-12-2002 - Authorities below, taxed profits arising from said sale as short-term capital gain - Whether since assessee sold property in question within 36 months from date it was converted into capital asset, i.e., investment, authorities below rightly brought to tax profit arising from sale of said property as short term capital gain - Held, yes
CA Galib Mirza
(Chartered Accountant)
(237 Points)
Replied 12 February 2010
we calculate the period for hodling the capital asset and not as stock-in-trade thus in this case asset is trasferred as Capital Asset on 01.04.02 and sold on 12.12.02 which is short term as per Sec. 2(29A)
SO THIS IS SHORT TERM CAPITAL GAIN
CAclubindia
