Treatment of business loss arise u/s 45(2) of it act

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 January 2018 Dear Sir,
Please clarify the treatment of business loss arise on conversion of capital assets into stock in trade u/s 45(2) by taking into account the FMV of capital assets on the date of conversion.

Thanks

Renu Goyal

Renu Goyal (Expert)
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20 January 2018 When capital asset is converted into stock in trade then capital gain/loss will arise on conversion considering fmv of such asset on conversion date.however taxable in the year in which stock in trade is actually sold. business loss/gains will arise on sale of such stock.