Treatment of ancestral land sold by converting into building

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DEVANG (Querist)
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01 May 2014 Hello,
If someone has ancestral land which he has costructed as residential building and sold it then
What is the treatment in income tax for filling of return?
Is it treat as capital gain??
Or treat as contractor??
Or any???

Nikhil Kaushik

Nikhil Kaushik (Expert)
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02 May 2014 assuming you are doing everything on your own, the proportion of sale consideration that can be attributed to sale of land will be taxed as long term capital gains arising out sale of land and the remaining consideration shall be taxed as short term/long term gains (depending on the holding period after construction of the building) as gains from sale of residential houses.

DEVANG

DEVANG (Querist)
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02 May 2014 Means we have treat it as LTCG/STCG.
But wht happen in this situation,
after construction of building, he has sold some flats in current year and some no. of flats sold in next year..
Now if AO can ask it as stk-in-trade
i.e. it becomes regular activity of real estate?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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02 May 2014 no...you are not a real estate developer. re-constructing your own property and selling it wont attract business income.

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DEVANG

DEVANG (Querist)
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02 May 2014 Ok thanks sir.........................

Nikhil Kaushik

Nikhil Kaushik (Expert)
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02 May 2014 you are welcome Devang....

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