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Capital gain

Tejas Jasoriya (CPT clear) (284 Points)

14 October 2015

Weather a building held as stock in trade a capital asset for the purpose of capital gain under income tax

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13 Replies

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 14 October 2015

No building held as stock in trade the transfer of the same is treated as business income.

1 Like

Miss Rinkal (Student) (1304 Points)
Replied 14 October 2015

Building sold which was held as stock in trade, will be taxed under PGBP and not as CG.

However where building held as stock in trade and lying unsold will be taxed as HP income

(Guest)

that depends on the intention of the business....if the building is held to exploit as stock in trade..the income goes to pgbp not hp

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 14 October 2015

No even if building held as stock in trade the rental income from the same is treated as hp if the building is a house property. Even if assesses intention is to run business of renting out house property.

Miss Rinkal (Student) (1304 Points)
Replied 14 October 2015

@ ubaid mohammed

I agree with Karthik. And only unsold stock in trade is taxable as HP income. If stock is sold then the same will be taxable as business income.

(Guest)

yes thats exactly what i said....its the intention that matters

Miss Rinkal (Student) (1304 Points)
Replied 15 October 2015

No its not about intention that I m talking of. If the building was not held as stock in trade, it would be taxable as CG instead of PGBP. You are still not getting the difference to what I mean. What my reference was building shown as stock in trade in the balance sheet at the end of the year, such stock will be taxed as HP income and not business income.

(Guest)

no u are incorrect. it doesnt matter if its unsold or otherwise. if u are holding the building to exploit it as "owner" and not as stock in trade , then it will be taxed in HP

and if u hold it as stock, it will never go in HP

Miss Rinkal (Student) (1304 Points)
Replied 15 October 2015

You read the provisions first. Then we will comment on the same. There are various case law. Few of them are Azimganj estate pvt ltd vs CIT (2013) 352 itr 82 (Calcutta High court) CIT vs Discovery Estate pvt ltd or CIT vs Discovery Holding pvt ltd Only 1 case law of Gujarat high court in CIT vs Neha Builders pvt ltd gives the judgement that building held as stock in trade is to be treated as business income and not as income from house property. Remaining all judgements state that it is to be treated as HP income and not business income

(Guest)

lets just agree to disagree on that one :D

Miss Rinkal (Student) (1304 Points)
Replied 15 October 2015

What do you mean by the statement? Please put some light on it.

(Guest)

i m saying lets just end this argument. i cant agree with u and u cant do that either. so lets end the discussion because the person who wants to learn something from the post is getting more confused by this argument

Miss Rinkal (Student) (1304 Points)
Replied 15 October 2015

Ya right. Let's just leave it. Its no point arguing. It was meant for coming to a conclusion which it seems that it is never ending debatable issue. Let's hope if one can clear the doubt raised by the member here