Hello,
I have a query regarding
agricultural land.
Land was held by assessee since long
and agricultural activities are carried out on land regularly. Now assessee
converted land to non-agricultural one thereby converting into plots for
further sale.
Now query is regarding taxation
purpose. Can this plot be taken under business & profession?
Please guide and suggest
Reply
Dear Sir,
According to Section 2(14) of the
Income tax act, 1961, Agriculture land is not a capital asset, therefore no
capital gain will arise on conversion of agriculture land into non-agriculture
land.
And the converted plot of land for further sale will
be considered as stock of business and profession, therefore on sale of such
plots the profit will be taxable under the head profits and gains of business
and profession.