Conversion of capital asset into stock-in-trade treated as transfer, triggering capital gains tax when subsequently sold. Conversion or treatment of a capital asset as stock-in-trade is to be regarded as a transfer for capital gains; the fair market value on the date of conversion is deemed the full value of consideration and capital gain is charged in the year the stock-in-trade is sold. A new section 47A withdraws exemption on transfers between a company and its wholly-owned subsidiary where within eight years the asset is converted to stock-in-trade or whole ownership of share capital ceases, and section 49 fixes the transferee's cost where deemed gains are taxed.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Conversion of capital asset into stock-in-trade treated as transfer, triggering capital gains tax when subsequently sold.
Conversion or treatment of a capital asset as stock-in-trade is to be regarded as a transfer for capital gains; the fair market value on the date of conversion is deemed the full value of consideration and capital gain is charged in the year the stock-in-trade is sold. A new section 47A withdraws exemption on transfers between a company and its wholly-owned subsidiary where within eight years the asset is converted to stock-in-trade or whole ownership of share capital ceases, and section 49 fixes the transferee's cost where deemed gains are taxed.
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