Tax Management India.Com

Home Page

Home List
← Previous Next →

FB 2018 - S.28 - CONVERSION OF STOCK INTO CAPITAL ASSET - AND RELATED PROVISIONS – a provision which is not required at all – must be droppe.

FB 2018 - S.28 - CONVERSION OF STOCK INTO CAPITAL ASSET - AND RELATED PROVISIONS – a provision which is not required at all – must be droppe. - Budget - By: - CA DEV KUMAR KOTHARI - Dated:- 3-2-2018 - Amendment of S.2 (24) relating definition of income is proposed inter alia to include cases of business stock-in-trade /inventory being treated or converted into capital asset. It is proposed to include fair market value of such stock (inventory) converted into capital asset to be considered as bus .....

X X X X X X X

Full Contents

X X X X X X X

d into fixed assets for purpose of business, a dealer of vehicles may convert some vehicles as his fixed assets for business purposes like demo vehicle, vehicle for transportation of stores and spares, staff bus etc. In such cases stock -in-trade is transferred to investment or fixed assets but ownership remain with the same person. Therefore, including fair market value in business income is not at all justified. In related provision, as exist about conversion or treatment of capital asset as s .....

X X X X X X X

Full Contents

X X X X X X X

to capital asset , at cost or book value, there is no accrual of any income. There is in fact no transfer of ownership. The asset remain with the owner. There is no sale or actual transfer. However, provision can be made that in case such converted capital asset is sold at the time of sale, income derived shall be computed under head business, based on cost or book value of converted stock and fair market value on date of conversion into capital assets. For computation of capital gains, provisio .....

X X X X X X X

Full Contents

X X X X X X X

It is proposed to insert a new sub-clause (xiia) in the said clause (24) so as to include the fair market value of inventory referred to in Clause (via) of section 28, also within the definition of income. Clause (42A) of the said section, inter alia, provides for determination of period for which the capital asset is held by the assessee. It is proposed to insert a new sub-clause (ba) in clause (i) of Explanation 1 of the said clause (42A) so as to provide that in case inventory is converted i .....

X X X X X X X

Full Contents

X X X X X X X

eable to tax under the head Profits and gains of business or profession . It is further proposed to amend the said section so as to provide that the fair market value determined in the prescribed manner of the inventory as on the date of its conversion or treatment as capital assets shall be chargeable to tax under the head Profit and gains of business and profession . These amendments will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-2020 .....

X X X X X X X

Full Contents

X X X X X X X

 

 

← Previous Next →