Profit on sale of Capital Assets

This query is : Resolved

O.P.SHARMA

O.P.SHARMA (Querist)
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10 March 2008 Dear Experts,

We are a company engaged in construction of Mall after Purchasing of land. and our income it leting, Leasing and Sales of Shops etc. In this regard we want to know :
1. Is Rental / Leasing Income be treated as Business income or Income from house Property.

2. How the cost be calculated for sale of shop at the Mall.

3. How the Profit on Sale of Capital Asstes be Calculated . Is indexetion is applicable.

regard.

Om Prakash Sharma

CA SHARAD SINHA

CA SHARAD SINHA (Expert)
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10 March 2008 1.since it is your business of letting and leasing it would be treated as business income.

2.cost can be calculated by dividing total cost to the total plinth area constructed including loading of common infrastructures

3.since you would be holding any unsold shop for sale as stock in trade there is no question of sale of capital asset and hence indexation , however you can always convert your stock in trade into capital asset based on your tax planning requirement and strategic business planning then the date of conversion would be recokoned for the purpose of holding and indexation would be applicable in case you hold the capital asset for 3 years from the date of conversion.

CA Saurabh Maheshwari

CA Saurabh Maheshwari (Expert)
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10 March 2008 BEING YOUR BUSINESS OF LETTING AND LEASING IT WILL BE TAXABLE UNDER THE HEAD BUSINESS INCOME.

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CA. GOPAL SONIKA

CA. GOPAL SONIKA (Expert)
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10 March 2008 It is ur business income and as such indexation cannot be calculated

R.V.RAO

R.V.RAO (Expert)
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10 March 2008 1. FOR ANY BUILDER / CONSTRUCTION FIRM, COST IS BASED ON COST PER SQ. FOOT .
2. SALE PRICE PER SQ. FOOT- COST PER SQ. FOOT IS PROFIT.
3. IT IS YOUR FULL TIME BUSINESS INCOME AND NOT A HOUSE PROPERTY INCOME.
4.SINCE THE PROPERTY FORMS PART OF YOUR NORMAL/REGULAR BUSINESS,THE STOCK NEEDS CONVERTION INTO CAPITAL ASSET(AT YOUR OPTION) FOR BEING TAXED UNDER CAPITAL GAINS WHEN INDEXATION APPLIES AS LONG TERM CAPITAL GAIN/LOSS FOR A PERIOD BEYOND 36 MONTHS .
OTHERWISE SHORT TERM CAPITAL GAIN/ LOSS.
R.V.RAO