05 December 2009
An individual person’s Balance Sheet shows (as assets) :- Silver & Silver Utensils Rs. 40,200/- in the FY 2007-2008. He started a proprietorship (Jewellery) business in the FY 2008-2009, by using Silver & Silver Utensils Rs.40,200/- as Opening Stock. Is there arising any tax liability on this transfer ?
05 December 2009
In the case of CIT Vs. Benarashilal Kataruka 185 ITR 493 (Cal.), it has been held that silver utensils consisting of thalis, katoris and tumblers meant for personal use constituted personal effects and the gains arising on sale of such utensils cannot be taxed as capital gains. Therefore, coversion of silver utensils meant for personal use is not a capital asset and hence conversion of its to stock in trade does not give rise capital gain and hence tax is not payable on such conversion.
CAclubindia
