I HAVE PURCHASED A LAND AND PLOTTED INTO 2 PARTS AND SOLD BOTH THE PLOT WITH HALF UNCONTRUCTION ON IT. WHEHTER THE INCOME ARISE IS IN THE NATURE OF CAPITAL GAIN OR BUSNINESS INCOME?
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Capital gain
Replies (7)
Business income. As per Sec 2(3), Business has defined as "any trade, commerce, manufacturing activity or any adventure or concern in the nature of trade, commerce and manufacture"
In this connection it is not necessary the activity should be repetative and of permanent nature.
It is arguable to say that the income would be chargeable to capital gain taxation. There is no doubt that one transaction can constitute a business. It all depends as to how the transaction is reflected in your books. Have u taken the land as stock in trade - in which case it would be treated as business income. If it is shown as an Investment, cap gains would arise. Would depend on a lot other factors too.
Abhimanyu JHamba
CA, Advocate
9218999999
it's cg only
It depends upon how you treat these plots as a investment or as stock. If you treat as investment than cap gain will arise otherwise it's chargeable under the head PGBP. You can also refer CIT vs ROHIT ANAND case.
Prima facie, it appears the land is aquired as stock in trade. Show it as stock in your books and the income as business income. Since the land is purchased, parted and constructed it may not attract CG. It also depends under what activity you have taken registration of VAT ST etc.. As a justification.
Its depend upon how u treats the land.if u treated it as stock then it is business income but if u treated it as investment then it is capital income
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