Conversion of fixed assets into stock in trade
But in vice versa situation i. If an assessee is in the business of real estate and on closure of his business he retains the existing stock in trade of immovable properties of the business with him and holds it as investment then it will become his capital asset from the time of closure of his business.
Clarification on accounting treatment of Assets being converted into stock in trade
Similar case can also happen in case of a business of trading in shares. Even during the continuation of the business the assessee may transfer some of his stock in trade into his capital asset by deciding to hold it as an investment and can sell the same at a later stage and can pay tax on the profit as capital gain instead of business profit.
In such cases, there will not be any capital gain at the time of conversion and if the assessee sells such converted asset at a later date, the profit will certainly give rise to capital gain and in order to ascertain whether such profit is long-term capital gain, the period of holding would have to be reckoned from the date of acquisition of the asset as stock in trade and not from the date of conversion into capital asset, as section 2 42A does not lay down that the holding of the asset for the required period has to be as capital asset.
Can once converted Capital Asset Land into Stock in trade can be convert again into Capital Asset.
If Yes then what are the tax implications. Now in example of Mr Adinarayana Rs. Please clarify on the taxation aspect of conversion of agricultural land as stock in Trade, esp. On the date of conversion of stock-in-trade into capital asset, the profit is chargeable as a business income.
Is it possible to follow such tax planning during the continuance of the real estate business.
Like hold the asset as stock for some period and then convert as capital asset and dispose and pay capital gain tax based on period of holding. This is with respect to the conversion of stock in trade, let us assume that, If an assessee is holding Equity shares as stock in trade and proposes to convert them as capital asset, it is mentioned that depending on the period of holding it will be subjected to tax if there are short term capital gains and if there are long term capital gains they will be exempt, if STT is paid.
For example ABC Ltd.
Google Groupes
No capital Gain arises on conversion of stock in trade into capital asset. Go through the case laws links conversion of fixed assets into stock in trade above by the Admin. Your email address will not be published. It seems you have Javascript disabled in your Browser. In order to submit a comment to this post, please write this code forex secret weapon with your comment: Income Tax Articles News Judiciary ITR PMGKY Deductions Section 80C Section 80D Section 80DD Section 80DDB Section 80EE Section 80EE Section 80G Money making professions wow 5.4 80GG Tax Planning Notifications Circulars Instructions Orders Press Release Budget Budget Income Tax Articles News Notifications Service Tax Articles News Notifications Excise Duty Articles News Notifications Custom Duty Articles News Notifications Budget S.
Tax Articles News Judiciary Notifications Circulars Instructions Orders Trade Notices Press Release Company Law Articles News Judiciary Notifications Circulars Excise Articles News Judiciary circulars Notifications Notifications Tariff Notifications N. Instructions Stock brokers lieberman Press Release Conversion of fixed assets into stock in trade Articles News Judiciary circulars Notifications Notifications Tariff Notifications N.
Notifications ADD Safeguard Notifications Instructions Orders Press Release GST Articles News Judiciary All Notifications GST Articles News Notifications MVAT Articles News Judiciary Circulars Notifications DVAT Articles News Judiciary Circulars Notifications PVAT Articles News Judiciary Circulars Notifications CA CS CMA Articles News Judiciary Notifications Empanelment ICAI ICSI CMA DGFT Articles News Judiciary Notifications Public Notices Circulars Trade Notices RBI Articles News Judiciary Notifications Circulars Master Directions Master Circulars Demonetisation SEBI Articles News Judiciary Notifications Circulars Regulations Press Releases Finance Articles News Judiciary Notifications Corp.
Law Articles News Judiciary Notifications CCI Notifications PPF Notifications. Income Tax Articles Featured. Tax planning by conversion of stock in trade into capital asset. Read Other Articles from Advocate Amit Bajaj.
Tax Provisions for Housing Finance Companies HFCs. Extension of ad-hoc appointments in the grade of JCIT. CBDT revises format of Form No.
Tax planning by conversion of stock in trade into capital asset
Articles Featured Advocate Amit Bajaj Capital Gain share capital April 4, at 4: March 1, at 3: June 25, at 4: March 5, at 3: March 5, at May 17, at May 14, at 8: May 13, at 7: AMIT BAJAJ ADVOCATE says: May 13, at Leave a Reply Cancel reply Your email address will not be published. What to do by 30th June, GST: Bifurcation of Paper 4- Taxation of Intermediate IPC Examination in 2 sections GST: Download Free e-Book on GST in Hindi 6 CGST and 2 IGST Notification with 5 GST Rules released by CBEC Important info related to GST Registration Dear Modiji, Let GST and New Financial year Begin from 1st January, !!
Newsletter Join our newsletter. We are going to provide you actual information without spam or fluff. Important Submit Article Calculators Income Tax Planning Income Tax Deductions Empanelment Exam Tips. Judgments Supreme Court High Court ITAT CESTAT CLB Judgments. TaxGuru Newsletter Subscription Information You Can Rely On. Daily Latest Updates In Your Mailbox.