CAPITAL GAIN OR BUSINESS INCOME

Page no : 2

amit pathak (STUDENT) (34 Points)
Replied 04 February 2010

it is capital gain as it is a transfer of fixed asset

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Rohit kr Mohta (Financial executive) (30 Points)
Replied 04 February 2010

It has been mentioned that land has been classified under Fixed Asset, so it is not the property the company intends to deal in.. ( if that were the case then it should be taken under the head Current Asset.)

Capital gain shall be charged on it and more specifically LTCG( as land is generally considered non depriciable). Your auditor passed it as business income as Indian Companies Act demands so, further more we should also consider that profit as calculated as per accounting rules and conventions generally differs from profits as computed under IT rules.So, I think this must have cleared things..

RADHIKA JALAN (agarwal) (1521 Points)
Replied 04 February 2010

i agree with abhimanyu &aditya..........

Dhruvesh Shah (partner) (443 Points)
Replied 04 February 2010

Conditions of Capital Gain are as follows :

(1) There should be a capital asset.

(2) There should be ownership of the capital asset

(3) There should be gain on the transfer of capital asset.

Now you got the answer to your doubt.

Max Payne (employed) (2569 Points)
Replied 04 February 2010

Originally posted by : Rohit kr Mohta
	It has been mentioned that land has been classified under Fixed Asset, so it is not the property the company intends to deal in.. ( if that were the case then it should be taken under the head Current Asset.) Capital gain shall be charged on it and more specifically LTCG( as land is generally considered non depriciable). Your auditor passed it as business income as Indian Companies Act demands so, further more we should also consider that profit as calculated as per accounting rules and conventions generally differs from profits as computed under IT rules.So, I think this must have cleared things..

Rohith Sir,

I think you identified the situation correctly regarding P&L........ but land is short or long term depending on the period of holding (i.e., more than 3 years)

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Shivish Verma (C A) (376 Points)
Replied 04 February 2010

Land has been sold as fixed assets hence there will be a capital gain. However, at the same time land is not a depreciable assets and is not covered under block of assets. Hence, Type of gain i.e. Short Term or Long Term will be subject to the date of Purchase.