Taxability of sale of land in parts in different plots

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Akshay (Querist)
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23 January 2016 hiiii everyone A land which is rural when purchased and now it comes in urban area and the same is sold after partition by making different plots . How the profit should be calculated and under which head business or capital gain , however it is basically not the business of party but he is doing like business for that land. if u have any link for particular section than please share.

CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
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26 January 2016 When you purchase the land it is capital asset. When you intend to do business of making plots it amounts to treatment of the same as stock in trade (i.e. conversion of capital asset into stock in trade) and will attract capital gain u/s 45(2). The chargeability of capital gain will postpone till the date of its final sale under business of selling the plot. Sale income of plots will be covered under business income (PGBP).