on of my clients had purchased an agriculture Land in 2002
This land is NOT a Capital asset u/s 2(14)
The thing is, he had sold the land after developing & plotting it in various parts to various different persons
some parts sold within 3 years and some after 3 years
now problem is, Will ITO add the same in Business Income as Assessee had made parts of a single land in various lands (by the way of plotting)& sold such parts of lands to various persons ?
06 October 2010
Question is that the same person doing this type of activity as his business activitiy or not.
If yes, then Mr. Punit is correct.
If Not, then i think after purchasing that land has not been used for Agricultural purpose, hence it is not agricultural land at the time of sale. Therefore, this should be taxable under capital gain.
06 October 2010
Section 2 (14) excludes land out of the definition of capital asset provided it is an agriculture land and it is out of the defined jurisdiction.
Exclusion will apply only if the land at the time of sale was agriculture land (Means it was used to carry agriculture operations).
Development and plotting is an activity carried to enhances sale value of agriculture land. Analogy can be drawn from the enhancing the value of agriculture produce by processing.
It can not be treated as business income unless the owner has carried business activity means transactions of execution and sale are executed.
CAclubindia
