12 July 2010
PLZ EXPLAIN WHICH ASSET U WILL CONVERTED IN TO STOCK BECAUSE IF IT COMES UNDER CAPITAL ASSET U HAVE TO GIVE TAX ON CAPITAL GAIN AS PER SECTION 45(2) BUT TAX WILL B PAID AFTER SELLING THE STOCK , HOWEVER IF CONVERTED ASSET IS NOT CAPITAL ASSET THEN NOT TAXABLE
12 July 2010
tax on transfer of personal assets which u have converted into stock in trade(if it is a capital asset) arises only at time of sale of the stock in trade.suppose u own the land that u brought into construction of house business in april 2008.capital gain arises at time of sale of houses in april 2009.sale consideration will be fair market value of land as on april 2008 less indexed cost of acquisition(indexation available only upto the yr of transfer into stock in trade).and business income will be sale of stock in trade less cost of stock(FMV as on apr 2008).
13 July 2010
To find out the taxability of personal asset while transffering it for business we need to check whether it will be capital asset u/s 2(14).
If it is a capital asset then it will be taxable when you will sell it as per Sec 45(2). However there will be 2 type of profits in it.
1- Actual Sale price - FMV on the date of conversion (book value as per A/c) = Profit from business or profession
2 FMV (Book value as per A/c) - COA/ICOA = Capital Gain.
If it is not a capital asset then only point 1 shall be applicable.
13 July 2010
If you are trading in shares on regular basis then it will be considered as speculation business. In this case there will be no actual delivery of share certificate.
So if it is on a regular basis then option 2 will be applicable. If it is not a business and now you are transffering it to business then option 1 will be applicable.
14 July 2010
Hey Any Referd the Audit Solution in the Caclubindia than please go through the answer 2(b) For (Ipcc Or Pcc) I have some doubt in that Paper
CAclubindia
