Whether the date of transfer, as referred to in section 54E of the Act, is the date of conversion of the capital asset into stock-in-trade or the date on which the stock-in-trade is sold or otherwise transferred by the assessee

Tax Board Revises Transfer Date Rule for Capital Assets Converted to Stock-in-Trade u/s 54E.

The circular addresses the determination of the 'date of transfer' under section 54E of the Income-tax Act concerning capital assets converted into stock-in-trade. Initially, the date of conversion was considered the transfer date for capital gains purposes. However, for deductions under sections 54EA, 54EB, and 54EC, the Board, after consulting with the Ministry of Law, decided that the six-month investment period should commence from the date the stock-in-trade is sold or otherwise transferred, aligning with section 45(2). This change acknowledges the practical challenges of making investments at the conversion point.