tax on sale of agricultural land

Hello, 

           the plot comes under the purview of Capital gains not  as a agricultural land,we can go through general rules regarding Cost of Acquisition.

Mr.Nilesh Gami and Mr.Mrinmoy Das

As the impugned property is acquired by way of inheritance the cost of acquisition shall be the cost for which the previous owner of the property acquired it. (Please see section 49 of I.T.Act, 1961)

You have mentioned that the siad property was got by inheritance before 1981 you have to adopt the value as on 1-04-1981. (Please refer section 48 of I.T.Act, 1961)

Best Wishes

Sathikonda

Is this income will taxable under the head of Business income or Capital gain. will it be interpreated as business activity ?

Mr.Nilesh Gami

The income arose on transfer of a capital asset will be taxex under the head  "income from capital gains".

Even if it converted into stock in trade also as on the date of conversion the difference between the cost of acquisition (as clarified ealier) as per the provisions of sub-section (2) of section 45 of income-tax act, 1961.

There after when the said stock-in-trade is sold,  the profits gained on sale of the stock-in-trade will be treated as income from business.

Best Wishes

Sathikonda

thanks for your valuable input.