Determination of income head
Querist : Anonymous
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..?
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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
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