House property

This is due to the applicability of section 23(5) which states that Where the property consisting of any building or land appurtenant thereto is held as stock-in-trade and the property or any part of the property is not let during the whole or any part of the previous year, the annual value of such property or part of the property, for the period up to two years from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority, shall be taken to be nil.
Hope this clarifies.
Sujit Talukder
www.taxcorner.co.in

When stock in trade is sold the income will always be business income.

It is only when the immovable property remains unsold then the question of income from house property arises. When the same will be sold the profit therefrom will be chargeable as business income.

A window of two years is given to the builder to hold the property as stock in trade. The period was 1 year earlier. In 2019, the provision was amended and allowed the period of holding to two years. Hence, if the builder fails to sell the buildings within two years of completion, he should pay tax on notional income under the head income from house property.

Hope this clarifies.

Sujit Talukder

www.taxcorner.co.in

Further, simply because the unsold stock in trade of the property or building is charged to income under the head income from house property does not alter the nature of the assets held as stock in trade. There is no provision in the Income Tax Act which automatically converts the stock in trade as capital assets. Any income will come under the head Capital Gains only when the same are held as capital assets. If the same is held as stock in trade, despite the fact that the income has been charged on a notional basis, such income will always come under the head business income and not under the head capital gains.

Hope this clarifies.

Sujit Talukder

www.taxcorner.co.in

When the property is held as stock in trade, section 43CA shall apply and not section 50C. Section 50C applies to a capital asset only.

When the property remains unsold, section 43CA will not apply. It will apply only when the property held as stock in trade is actually sold.

Hope this clarifies. 

Sujit Talukder 
www.taxcorner.co.in