Long term capital Gain

[Pullikalu venkateswara reddy]

An Individual is having Non Agricultural Land ( measuring 10 acres)for holding more than 3years. If he sells the Land property, How can we treat the Gain amount whether it comes under Business income or Long Term Capital Gain.

[CAGOPALJI AGRAWAL]

It would be Long term capital gain unless the assessee has been doing the business of lands.

[Mritunjay Kumar]

Dear Mr. Reddy, The period of 3 years becomes irrelevant, if the person is engaged in the business of land (sale/purchase). For this purpose surrounding circumstances to be seen. i.e. whether the assesse has been involved in other sale/purchase of lands and other circumstances that are surrounding. If this is the sole case of sale of land and no such transaction has taken place in the nearby time, then even if the sale of this land is made within 6 months instead of 3 years, then also the income from it will fall under the head capital gains.

AI Summary

Long term capital gain treatment may apply to land sale unless the seller is engaged in land trading, determined by circumstances. Sale of non agricultural land is ordinarily classified as Long Term Capital Gain where the seller is not engaged in the business of dealing in land; if the seller is in the business of land trading, proceeds are treated as Business Income. The characterisation depends on surrounding circumstances and transactional history rather than the holding period alone, and a solitary sale absent other indicia of trading may be treated as capital gain even if held for a shorter period.