Rinky Gupta (-) (117 Points)
20 May 2016Suppose a capital asset is converted into stock in trade in FY ending on 31-03-2016. Thus, deemed capital gains is calculated as on 31-03-2016.
Now the company wants to make a provision for future expenses and want to claim the same as cost of improvement.
Is it viable?
C.M.A SHANKAR JAYAN
(Probationary Officer at South Indian Bank)
(140 Points)
Replied 20 May 2016
Once the capital asset is converted to stock,additional expenses incurred after the conversion date can not be claimed as cost of improvment. The charecter of the asset has changed from capital to revanue hence such expense should be charged to P&L ( i.e they fall in PGBP)
CAclubindia
