s. 45(2) conversion of depreciable asset to stock in trade

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Raj (Querist)
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15 October 2008 what will be the tax implication of a depreciable asset been converted into stock in trade (eg offices held under fixed asset by a builder)?
Assuming that the block is not empty after conversion,
1.How will the same be adjusted in the block of asset?

2.How will the capital gain be computed ?

3.When will the capital gain be chargeable to tax ?

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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16 October 2008 In such a case, my opinion to ur queries given under:
1. The same may be transferred at its market value to the block as on the date of conversion
2. Capital Gain whether STCG or LTCG shall be worked out at the time of actual sale. For this purpose the date and value of conversion shall be its date and cost of acquisition.
3. Capital Gain will be worked as in a normal case considering the date of conversion as its date of acquisition. There will not be any STCG u/s 50 on conversion as the entire value of coversion is to be adjusted in the value of the block.