26 July 2016
Dear Sir/Madam I have received a flat as a gift from my Grandmother in May 2016 which was purchased by her in 1996, now i have sold the same flat in July 2016. at the same time I have also purchased another flat in same building in May 2016 and the another purchased flat is also sold along with gifted flat . I want to treat the sale of both the flats as business income and not as capital gain and want to file return U/s. 44AD Please respond Thanks
28 July 2016
A flat in a condominium or an apartment is a capital asset. [refer section 2(14)]. If you treat (convert) such capital asset (flat) as stock-in-trade of your business, the capital gains shall be chargeable to income tax in the previous in which such stock-in-trade is sold / transferred. The fair market value as on the date of conversion shall be the full value of consideration for the purpose computing capital gains.
Also business income on sale of flat shall be computed.
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