TaxTMI 
TaxTMI 
A company has converted its listed shares from Stock-in-Trade to Investment as on 01.04.2004.Whether the difference between cost of Shares and Market value on that date shall be liable to Capital Gain?
Liability of capital gain
09 Sep 2009 
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Conversion of capital asset to stock-in-trade: capital gain taxed only on subsequent sale, fair market value deemed consideration.
Conversion of a capital asset into stock-in-trade does not create immediate tax liability; tax is chargeable only in the previous year in which the stock-in-trade is sold or otherwise transferred. For computing capital gain at the time of sale, the fair market value on the date of conversion is deemed to be the full value of the consideration, and capital gain and business profit must be calculated accordingly. (AI Summary)
Conversion of a capital asset into stock-in-trade does not create immediate tax liability; tax is chargeable only in the previous year in which the stock-in-trade is sold or otherwise transferred. For computing capital gain at the time of sale, the fair market value on the date of conversion is deemed to be the full value of the consideration, and capital gain and business profit must be calculated accordingly. (AI Summary)