Capital gain
Tejas Jasoriya (CPT clear) (284 Points)
14 October 2015
Weather a building held as stock in trade a capital asset for the purpose of capital gain under income tax
13 Replies
Karthik.V.Kulkarni
(Chartered Accountant)
(594 Points)
Replied 14 October 2015
No building held as stock in trade the transfer of the same is treated as business income.
Miss Rinkal
(Student)
(1309 Points)
Replied 14 October 2015
Building sold which was held as stock in trade, will be taxed under PGBP and not as CG.
However where building held as stock in trade and lying unsold will be taxed as HP income
Karthik.V.Kulkarni
(Chartered Accountant)
(594 Points)
Replied 14 October 2015
No even if building held as stock in trade the rental income from the same is treated as hp if the building is a house property. Even if assesses intention is to run business of renting out house property.
Miss Rinkal
(Student)
(1309 Points)
Replied 14 October 2015
@ ubaid mohammed
I agree with Karthik. And only unsold stock in trade is taxable as HP income. If stock is sold then the same will be taxable as business income.
Miss Rinkal
(Student)
(1309 Points)
Replied 15 October 2015
No its not about intention that I m talking of. If the building was not held as stock in trade, it would be taxable as CG instead of PGBP. You are still not getting the difference to what I mean. What my reference was building shown as stock in trade in the balance sheet at the end of the year, such stock will be taxed as HP income and not business income.
Miss Rinkal
(Student)
(1309 Points)
Replied 15 October 2015
You read the provisions first. Then we will comment on the same.
There are various case law. Few of them are
Azimganj estate pvt ltd vs CIT (2013) 352 itr 82 (Calcutta High court)
CIT vs Discovery Estate pvt ltd or CIT vs Discovery Holding pvt ltd
Only 1 case law of Gujarat high court in CIT vs Neha Builders pvt ltd gives the judgement that building held as stock in trade is to be treated as business income and not as income from house property.
Remaining all judgements state that it is to be treated as HP income and not business income
Miss Rinkal
(Student)
(1309 Points)
Replied 15 October 2015
What do you mean by the statement? Please put some light on it.
Miss Rinkal
(Student)
(1309 Points)
Replied 15 October 2015
Ya right. Let's just leave it. Its no point arguing. It was meant for coming to a conclusion which it seems that it is never ending debatable issue. Let's hope if one can clear the doubt raised by the member here
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