Determination of income head

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 February 2013 Dear sir/madam,

My client has an old agriculture land. He has purchased it in 2004. He has converted this land into non-agriculture land and develop a residential society on it. Out of these plots, he has sold 60% plots in current year.

Now my question is that can we consider the profit from the sales of the said plots under the head business or profession..? And can we show balance plots as a stock in hand..?

Is there any implication under the head capital gain..?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

01 February 2013 Till the date of conversion into Stock in Trade, you may compute capital gains.
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The Market value of land on such date is to be considered as sales Consideration.
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The Capital Gains Tax has to be paid -in the year of actual transfer-i.e. when the land is sold.
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If the land is sold in pieces, proportionate
capital gains income has to be computed.
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The Difference of Actual Sales consideration and fair market value on the conversion date -will be Business Profit.
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Querist : Anonymous

Querist : Anonymous (Querist)

02 February 2013 very very thanks sir...

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