09 January 2016
Refer section section 2(14) where it listed: 1. Property of any kind; 2. Securities; 3. Jewellery; 4. Archaeological collections; 5. Drawings; 6. Paintings; 7. Sculptures; 8. Any art of work; 9. Ornaments made of gold, silver, platinum or any other precious metal etc. 10. Urban agricultural land ........so on.. The above are in the nature of fixed assets / investment assets. However. if the assessee wants to sell such assets as it is, the sale will be treated as transfer u/s 2(47) and liable to charge as capital gains tax u/s 45.
If the assessee has a huge pool of such assets and wants to start a trading of these items, he first convert / treat them as stock-in-trade (current asset) and then sell them. There is no restriction to convert even one such asset into stock-in-trade. The income in such case is liable for tax under profits and gains of business or profession.
Such conversion is also liable for capital gains tax. However, the taxability will be postponed u/s 45(2) till the previous year in which its actual sale takes place.
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