Latest Query & Reply

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.