09 December 2013
Respected sirs, I earned a profit of Rs 11 lacs in FY2012-13 by trading in land.I entered an agreement to sale with owner of land by giving him 2 lacs advance. Then I found a prospective buyer for the same land at a premium(higher price) and entered into another agreement to sell with him (document retained by him),received money from him (acknowledgement receipts given by me on the back of the document)and and paid off the total consideration to the seller land owner and kept the premium(difference)and the seller executed the sale deed in favour of the person who had paid me money by virtue of the agreement between me and the original seller.MY QUESTION IS 1)What is the nature of the income earned by me?Short term capital gains in immovable property or business income?I have earned some quick bucks this way thrice in FY2012-13. 2)I have not retained the said agreement to sale or its photocopy.Will the Income tax dept ask for documents(agreemnts for sale)? If I am unable to produce the agreement to sale what will be the implication? Thanks in advance.
09 December 2013
It seems to be your business. You can show it as your business income. . As you have earned money and you understand that by earning money tax liability arises, then you should also keep certain documentary evidences with you to explain the source and quantum of income. . Quick bucks go faster then they come. .
10 December 2013
Res. Paras Sir, Which is better for me, business income or STCGs for me, taxation wise? Second question sir, what did you exactly mean when you stated quick bucks go faster than they come.I am asking this because in land sale/trading through Agreement to sale, a short period of 2-4 months is only given. So they whole deal by its very nature is a short affair. I have no choice. Third question sir, I Shall retain the copies of Agreements to sale in future. But what will happen to transactions of which I have not retained the Agreement(having receipts at their back)? Thanks in advance.
10 December 2013
Q-2 My remark is a general in nature but specific to the situation. . This indicates that there lies a solution in the present system, by spending money. . Q-1 Considering the facts you should show the same as business income as there is no difference in tax rates. The purpose remains to earn Quick Bucks (Business Profit) rather than Big Ducks (Capital Gains). . Q-3- You may get the copy from the concerned parties of the agreement by asserting the purpose and reason. .
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