Capital gain

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

12 December 2012 Dear Sir,
One of my client has purchased a old residential house and demolished it. And after that he constructed five shops at the ground floor and then he constructed a residencial house on the 1st floor for his own purpose.
Now he has sold all shops made on ground floor.
Now my question is that selling of shops will fall in the head of capital gain
or
it will be consider as business activity like the builders do.

Please advise me.

@VaibhavJ

@VaibhavJ (Expert)
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12 December 2012 Hey,

You can consider this as business activity, since it can be proved as trading activity i.e. buying old house & constructing shops for commercial purpose.

Thanks

Querist : Anonymous

Querist : Anonymous (Querist)

13 December 2012 In the above case, while computing the cost of shops made as a business expenditure, the cost of land purchased would go in the cost of shops made
or
It would be added to the value of residential house made on 1st floor for own use
or
50% of land purchase cost would be add to the shops cost and rest 50% of land purchase amount should be add to the cost of construction of residential house.
Please advise me.

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Querist : Anonymous

Querist : Anonymous (Querist)

13 December 2012 Please reply