Land held as capital asset had been sold to different parties in small pieces of plots and the entire consideration is utilised for purchase of a residential house in chennai... can i claim exemption under section 54F of income Tax Act.
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Section 54f of it act
Replies (5)
Yes
Dhiraj sir, does it not amount to conversion of capital asset under 50 and hes is disallowed thereby for business profit?
Correct Mr. Revanth Bharathwaj M.
It depends upon the intention of the assessee. And thus decided upon case to case.
"Selling of own land after plotting it out in order to secure a better price is not in the nature of trade or business, more so when the land was gifted to the assessee." [CIT v Suresh Chand Goyal 209 CTR 410 (MP)(2007) see also Ram Saroop Saini (HUF) v ACIT 15 SOT 470 (Del)(2007)].
Where as
"The activity of an assessee in dividing the land in to plots and not selling it as a single unit as he purchased, goes to establish that he was carrying on business in real property
and it is a business venture." [Raja J. Rameshwar Rao v CIT 42 ITR 179 (SC)(1961)] also see CIT vs Tridevi (V.A.) (1988) 172 ITR 95 (Bom).
much clarifying sir. thanks.
My Pleasure.
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