Taxability in case of Conversion of Stock in Trade into Capital Asset
September 10, 2022
As per clause (via) of section 28 of the Income Tax Act 1961, the fair market value of stock in trade/inventory as on the date of its conversion into capital asset shall be chargeable to tax under the head PGBP in the year of conversion.
As per section 49(9) of the Act, the cost of acquisition of such capital asset shall be deemed to be the fair market value of capital asset which has been taken into account for the purposes of computing business income above.
As per clause (ba) of Section 2(42A) of the Act, period of holding of above capital asset shall be computed from the date of its conversion to the date of transfer.
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