MAT on conversion of Fixed Assets to Stock in trade

i think mat will be applicable here,bcoz i wll pass the entry that:

stock..........dr 25000

to f.a..............10000

to reserve/p&l..........15000

if i transfer to p&la/c then i have to pay mat

and if i trnsfr to reserve then i will not get deduction unless i dont add it in book profits

it means i have to pass it through p/l a/c

rest u must confirm it n

do inform me also ,if possible

thankxxxxxxx

Hi thanks for the reply, but I could not understand what deduction I will get if not passed through P&L.
 

Whether Companies Act allows to pass the unrealised profit to Reserve a/c? Rs 15,000 is unrealised right now.

yes u can transfer it to reserve

when we revalue asset then also we transfer it to revaluation reserve,that also  is unrealized one

but here when u sold the goods later then obvious the cancel the reserve created.then it will be added back in computing book profits...

hI Sujit, i am facing the same problem but i don't know the solution, if you have got the answer by now, please let me know. Thanking u in advance.

hello

first of all i want to say that as per AS-2 nd income tax act stock is carried in the books

at m.p or cost whichever is less ......

second thing if u transfer the asset at higher price nd ransfer the profit to p& l a/c then as per mat

it will be reduced from the profits ... so no mat

hi Sujit

Mat will be not applied for the F.Y 2008-09 as this gain is a capital gain and as while calculating MAT we have to calculate book profit on which MAT is applied and capital gain is not consider for calculating book profit. 

so in this case MAT Calculation is not attracted.