TAX TREATMENT

IF AN ASSESSEE HAS CONVERTED OR TRANSFERED ITS CAPITAL ASSETS AS HIS STOCK IN TRADE FOR ITS BUSINEESS PURPOSES, THEN WHAT WILL BE THE TAX TREATMENT FOR THE ABOVE CASE AS PER GULIDINES OF it ACT

Replies (3)

Section 45(2)-

Notwithstanding anything contained in sub-section (1), the profits or gains arising from the transfer by way of conversion by the owner of a capital asset into, or its treatment by him as stock-in-trade of a business carried on by him shall be chargeable to income-tax as his income of the previous year in which such stock-in-trade is sold or otherwise transferred by him and, for the purposes of section 48, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset

regards,

ratan

conversion of capital asset into stock in trade will be taxed in the year of sale.

capital gains - date of purchase(cost of acquisition) to date of coversion(FMV as on that date)

business income - calculated as usual

thanks 2 all

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