Income from business or capital gain??

Save Share

This query is : Resolved

CA Hitesh Motilal Purohit (Querist)

30 November 2013 Hello Friends..... An interesting scenario here. Suppose there's an individual who constructed a building having 20 flats on an inherited land. The structure alongwith RCC fillings, etc was erected in Year 2000-01 itself. However since there was no Sales upto FY 13-14 due to legal disputes, the same wasnt been disclosed in IT returns. In current Year FY 2013-14, other major expenses like flooring, plumbing, electrification, painting, etc were incurred. Also first few flats were sold in current year itslef. Now my query is whether this income shall be disclosed as Business Income or Capital Gains.

Manish Bhandari

Manish Bhandari (Expert)

30 November 2013 I treat that the above assessee is not in the business of building & development. Now on inherited land he on his own started the construction which would fit as adventure. The expenses of 2000-01 if are supported by documents invoice & cheque payments you can introduce them now through JV as work in progress.
Finally treatment as business income will be appropriate as per my opinion

Nikhil Kaushik

Nikhil Kaushik (Expert)

01 December 2013 the land is in your name. starting construction on your own is not the determining factor. The determining factor is how you sold the flats?? as a developer? Did you take service tax and VAT registrations??? Did you do some branding for the construction??

If not, if your idea was only to construct a building, then it would under capital gains.

else, Manish's view shall prevail.

If the flats are

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now