PAYMENT OF INCOME TAX

This query is : Resolved

DINESH K SHAH (Querist)
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19 July 2008 GOOD MORNING. MY QUERY AS FOLOWS:

WE ARE HAVING A SHED IN MUMBAI AND PURCHASED ONE MORE LAND AND BUILDING IN ANDHRA PARADESH. NOW WE ARE PLANNING TO SELL THE SHED AT MUMBAI AND WANT TO INVEST THE COMPLETE SALES VALUE OF THE SHED IN CONSTRUCTION OF ADDITIONAL BUILDING ON THE NEW PLOT/BUILDING PURCHASED IN ANDHRA PRADESH.
WE WANT TO KNOW THAT ANY INCOME TAX IS PAYABLE ON THE PROFIT EARNED FROM THE SHED SALES.

WHAT INFORMATION WE HAVE IS THAT IF THE SALES VALUE IS INVESTED IN NON MOVEABLE ASSETS THAN INCOME TAX IS NOT PAYABLE. PLS CLARIFY

THANKS

D.K.SHAH

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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19 July 2008 It is presumed that the shed at Mumbai is used for business and also the land and building purchased at Andhra is meant for business. In such a case, the profit from sale of shed at Mumbai may be adjusted agst the c/o new building as both items pertain to the same block of assets. Also, no tax is payable in the given situation. Contrary to this if it is not a business asset then the profit will be taxable as capital gains.