Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (3) TMI 242 - AT - Income TaxEstimated income on conversion of stock in trade into investment - would it make any difference whether for its accounting purpose the assessee transferred such stocks at cost instead of prevailing market value? - HELD THAT:- Assessee has converted the stock in trade into investment but no doubt there is a gain to the assessee on the difference of conversion. But the assessee cannot make any profit on its own merely because it is converted certain shares from stock in trade to investment. As far as the Income-tax is concerned the taxable event occurs when the assessee actually transfers the shares to other persons, other than himself. Therefore, when the capital gain is calculated the assessee will consider actual sale consideration and deduct the actual cost of shares acquired. Therefore, on the date of such actual transfer the profit earned by the assessee at the time of transfer is relevant and any conversion taken place earlier by the assessee shall be ignored. It is clear from the decision of Sir Kikabhai Premchand [1953 (10) TMI 5 - SUPREME COURT] that mere conversion of stock in trade into investment will not generate any taxable profit to the assessee. Therefore, we are in agreement that one cannot make profit of its own by converting stock in trade into investment or investment into stock in trade - Decided in favour of the assessee.
|