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TMI BlogCapital asset- stock-in-tradeX X X X Extracts X X X X X X X X Extracts X X X X ..... For brain storming: Does the A.O. has jurisdiction and power to treat a 'capital asset' as stock-in-trade? In my view -no. Every property is a capital asset, except some excluded items. Whether,an item is stock-in-trade or not will depend on the basis of items for which any person is known as trader or dealer, so long he continue business as a trader, stockist, distributor or a person open to buy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sell such items he is dealer in such item and such items will be his stock-in-trade , in normal course of business. Pool of cars used to run on hire are capital asset, the same person may trade in cars, cars kept for selling are only his stock-in-trade. In cases where a person is not a trader of any item say shares , units, his holding will be capital assets, unless he has treated or converted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such assets into stock-in-trade and S. 45(2) is attracted. The assesee has option u/s 45(2) to treat or convert a capital asset into stock-in-trade, but the AO has no such power or option. Sale of a 'capital asset' require computation under head' capital gains' and AO should not make it under head business. A person is engaged in business of cars, he purchases cars and is known as dealer of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars, - cars purchased by him will be his stock-in-trade in natural commercial way. He can treat some cars as his capital assets by transferring to fixed asset account. If he sells such a car (F/A)the computation will be under head 'capital gains'. If he again convert such a car (F/A) into stock-in-trade, then computation will be under head 'capital gains' and business income on application of S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45(2) . A furniture show room purchases furniture and is known as seller of furniture in market and commercial world, furniture purchased is his stock-in-trade in natural and commercial way, if he want to use some furniture for furnishing of showroom, or office he can either directly treat them as furniture (F/A)at point of purchase or can convert some of his stock in trade into furniture (F/A) - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reply By manoj gupta - The Reply = No, the Assessing Officer has no such power to treat a capital asset as stock in trade. - Capital asset- stock-in-trade - Query Started By: - DEV KUMAR KOTHARI Dated:- 22-6-2010 Income Tax - Got 1 Reply - Income Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... managementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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