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Capital Gains
Direct Taxation
As per Sec 45(2), conversion of capital asset to stock in trade is taxed in the year when such stock in trade is sold.. But, in the given sum X sells the stock in trade on June 10, 2021..Then tax is payable on 2021-22. But, answer reveals that conversion will be chargeable to tax only on AY 2022-23! How is it soo? Pls clarify!
Answers (3)
Oh..Interpreted the provision erroneously.. It is given that the profits and gains arising from the conversion will be chargeable to income tax as his income of the "previous year" in which the asset is sold or otherwise transferred! In the question above, as stock-in-trade was sold in 2021-22, it is considered to be prev yr and tax is chargeable on AY 2022-23! Now Am I right?
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