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Taxation on gold transfer

unknown (B.Com) (87 Points)

02 June 2017

there is a director who has transferred his personal gold to his company. the company deals in the jewelry business so the gold is held as stock in trade can some one please let me know that how will this be taxed under income tax act.

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9 Replies

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 02 June 2017

I think Fair market value on the date of conversion is the consideration for taxing the capital gains for a capital asset converted into stock in trade charging section 45(2)

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unknown (B.Com) (87 Points)
Replied 02 June 2017

but sir the partner was earlier doing jewelry business only. so the gols is held as stock in trade. SIT is transferred as SIT and comapny is also using it as its stock

PRABIR PAUL (*****Accountant***** Never insult to any person for any kind of lack of knowledge or misread.) (1443 Points)
Replied 02 June 2017

Please placed the question correctly at first you said director then you are saying partner????

At first you said personal gold now you are saying Stock in trade gold.

Please placed the question correctly carefully otherwise you never ever get the correct answer from our end.............

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unknown (B.Com) (87 Points)
Replied 02 June 2017

i m really sorry sir, he is a director and earlier was doing business of gold jewelery. now he became a director in a company and is also a share holder in the comapny of 33% share, now he transfers his stock to busi in which he is a director as well as share holder. and company uses that gold as stock only. plz guide

PRABIR PAUL (*****Accountant***** Never insult to any person for any kind of lack of knowledge or misread.) (1443 Points)
Replied 02 June 2017

If stock in trade transferred to as stock in trade with consideration(i.e. paying money) then it will be added as turnover of the transferer company and it will be taxable under the head "PGBP" not Capital Gain.