TREATMENT OF REAL ESTATE BUSINESS

[SUDHAKAR SIVARAMAN]

Dear professionals,

My client is a partnership firm doing real estate business by way of buying land and converting in to plots and selling the plots. My doubt is whether income from this activity is Income from Business or under capital gain. Pls suggest

AI Summary

Partnership Firm's Income from Land Sales Classified as Business Income, Not Capital Gains, Per Tax Guidelines. A query was raised regarding the tax treatment of income for a partnership firm engaged in buying land, converting it into plots, and selling them. The concern was whether this income should be classified as business income or capital gains. The response indicated that the activity aligns with a business operation, suggesting that the income should be taxed under profits or gains from business/profession. It was advised to refer to relevant case law for further academic interest, specifically mentioning cases from the Rajasthan High Court and the Supreme Court for additional context.