Sale of agricultural land as plots

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This query is : Resolved

SHaikh Saddam (Querist)

07 March 2019 I had purchased a piece of land for 44 Lac in the year 2014-15. I tried selling the asset as a single piece land. But the last 4 years I wasn't able to do the same. In the year 2018 I did N.A of the said land and developed the land into 48 plots.

Can I consider this sale as sale of capital asset and pay the LTCG or this be considered as stock in trade and regular Income from business or profession will need to paid?

If we consider it as stock in trade what point should be taken as conversion of asset from capital asset to stock in trade as my sole intention was intially to sell the asset as a single unit.

Please elaborate this in detail.

Rajesh Kumar

Rajesh Kumar (Expert)

07 March 2019 Section 45(2) of Income Tax Act deals with the cases where a capital asset is converted into stock in trade. Whenever a capital asset is converted into stock in trade by an assessee it is deemed as transfer of capital asset and attracts capital gain provisions, in spite of the fact that the ownership of such capital asset doesn’t change by such conversion.
It can be converted into stock in trade at any point convenient to you, preferably before you make the first sell of plot.

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