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| The Tax Publishers2020 TaxPub(DT) 1240 (Karn-HC) : (2020) 270 TAXMAN 0148 INCOME TAX ACT, 1961
Section 45
Where an assessee converts his capital assets into stock-in-trade and starts dealing with them, the taxable profit on the sale must be determined by deducting on sale proceeds and the market value at the time of their conversion into stock-in-trade.
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Capital gains - Computation - Shares held by assessee converted into stock-in-trade -
Issue arose as to whether shares held by assessee were converted into stock-in-trade, then value of closing stock at the end of the year was required to be valued at the cost to the business at the time of conversion (i.e. the market value at the time of conversion) or cost of acquisition or net realizable value whichever is less. Held: Where an assessee converts his capital assets into stock-in-trade and starts dealing with them, the taxable profit on the sale must be determined by deducting on sale proceeds and the market value at the time of their conversion into stock-in-trade. Thus, matter was remanded to AO to decide it afresh.
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
IN THE KARNATAKA HIGH COURT
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