Search Results For: 45(3)


QUERY: We are carrying on real estate business and hold land at stock-in-trade. The land cost us Rs. 50 lakhs. It is worth Rs. 2 crores today. We propose to revalue the land at its market value in the books of account and credit Rs. 1.50 crores to the P & L A/c. We shall introduce the land as our capital contribution in a firm in which we will become partners. The firm will credit our capital account by Rs. 2 crores. Are we taxable on the difference between Rs. 50 lakhs and Rs. 2 crores?
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Yes! As per the judgement of the majority in the Special Bench in DLF Universal vs. JCIT, stock-in-trade gets converted into a capital asset at the point of introduction into the firm and attracts s. 45(3).