Become a Certified GST Practitioner in just 58 hours. Register Now!

Stock in trade to capital goods

rakesh (to be a ca) (25 Points)

06 September 2018

I sold a property in Mar-17 ,which is shown under stock in trade in the financial statement. can I convert such stock property into stock if yes then what are tax compliance and accounting requirements.

Reply
Follow
Share

5 Replies

rama krishnan (12244 Points)
Replied 06 September 2018

if it's stock in trade, then the net income realized from the sale will be treated as business income

Upgrade to CAclubindia Pro. Subscribe Now!

Ashwin Kumar (CA ipcc) (449 Points)
Replied 06 September 2018

Depends on the assessee. If your business is trading in property, then profit on such sale will be treated as business income. If not, then it will be treated as capital gains and the same will be taxed under it.

rakesh (to be a ca) (25 Points)
Replied 06 September 2018

but I want to convert it capital assets whether it's possible if yes then what is the tax consequences...

Ashwin Kumar (CA ipcc) (449 Points)
Replied 06 September 2018

I think you cant. from your answer i have assumed that you are a trader in properties. In that case property held by you for your personal purpose only will count for capital asset( which is not intended for sale and same should not have been showed as stock in trade) here in this case you have showed the property as stock in trade and the same has been traded for profit. post sales changes cannot be made to the transaction and the income arising on such transfer will be considered as business income.