Conversion of stock in trade into capital asset

[manoj gupta]

Dear Sir, thanks for the reply. But my question is reverse. It is about conversion of stock in trade into capital asset and not capital asset into stock in trade. what are the provisions for conversion of stock in trade into capital asset. what sections of income tax govern this.

AI Summary

Conversion of stock-in-trade into a capital asset triggers capital gains tax on subsequent disposal with FMV deemed for computation.
Conversion of stock-in-trade into a capital asset does not trigger tax immediately; capital gains tax arises only on subsequent transfer, with the fair market value at conversion deemed as the full value of consideration for computing capital gains and the original holding period while it was stock-in-trade being relevant to holding period attribution.