Regarding income tax.

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This discussion addresses income tax queries related to the sale of agricultural and non-agricultural land. It examines whether profits from selling sub-plots of converted land should be treated as capital gains or business income, and the potential impact on claiming Section 54F benefits. The core question is whether the Assessing Officer can classify the land sale as a regular business activity, thereby disallowing capital gains treatment and Section 54F.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)
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03 March 2025 The agriculture land was purchased in FY 2005.
• It was converted to non-agricultural land in FY 2014.
• It was shown as an investment in the 2016-17 ITR
• After 2016-17, ITR 4 has been filed, meaning no balance sheet has been uploaded.
• Other land and plot sold and shown as business income in FY 2021-22 and FY 2022-23
• Some of the sub-plot sold (from converted non agriculture land in 2014) shown as capital gains in FY 2023-24. Remaining sub –plots sold in FY 2024-25 with sales consideration of approximately 5,00,00,000/-.

Whether AO can argue that regular nature of business is builder 54 f not allowed or due to sub plotting of land profit and gain head will apply hence 54 F not allowed ?