stock in trade

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 May 2010 respected members
a newly formed company buy a property as stock in trade to get the old structure demolished and construct flats but later project was called off.now company after 4 years wants to sell the property as it is.what are the tax implications on the company.cost of purchase 20 lakhs but now due to abnormal increase in circle rate by development authority.the price has zoomed to 40 lakhs as per stamp duty.cost of property is still not more than 22 lakhs due to property prices correction

CA Shiv

CA Shiv (Expert)
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15 May 2010 CAn you tell me the exact treatment don till today? and if you want to sell the property at wat amount can u sell off.

Querist : Anonymous

Querist : Anonymous (Querist)

15 May 2010 company hold it as stock in trade till now.company can sell it at the most 24 lakhs

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CA.Madhusudan B.P.

CA.Madhusudan B.P. (Expert)
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20 November 2010 If the company is a real estate/ property developers then, the purchase of land would be treated as Inventory.
Otherwise it is a capital asset.

If the land is selling now, which was purchased 4 years ago, shall be treated as Long term capital gains.

Sale consideration less Indexed cost of Acquisition.