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A limited company holding immovable property ( Plot ) as INVESTMENT valued at RS 1 crore (cost ) , In the FY 2012-13, CONVERETED INTO STOCK IN TRADE and FMV ( Fair Market Value ) is Rs 10 crore.
1. AS per Income Tax Treatment- Section 45(2) shall apply .
2. For accounting : How to reflect difference of RS 9 crore ( inconsistent with Accounting Standard -2) , Revaluation reserve seems to be inappropriate as the same is not fixed assets and intention is to trade / sale and amortized Rs 9 crore through profiit & loss account based on the respective year sale.
3. Can it shown as " UNREALISED GAIN " and directly credit to Reserve & Surplus ( not available for distribution ). If yes , whether the provision of section 15 JB Shall apply . In my understanding , book profit is not required any adjustment on account of unrealized gain or loss , it is only taxability under income tax provision.
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