Sale of Residential Buildings under Sec-44AD

[giri gattupalli]

Respected Sir,

One of my client is in construction business. He purchases vacant site and get them registered in favour of him and he constructs house and sells to customers and register in favour of them. During F.Y 2025-26 he sold 5 house properties for sale consideration of Rupees approximately One crore and fifty lakhs and register in favour of them. He is registered under GST and turnover has been disclosed in GST returns.

Please advise me that for the purpose of Income tax return filing the above business can be covered u/s 44 AD or whether it is covered under Capital gain. Please advise.

AI Summary

Presumptive taxation for residential construction sales requires distinguishing business income treatment from capital gains treatment.
Income-tax treatment of receipts from a business that acquires vacant sites, constructs residential houses, and sells them to customers is in issue. The query considers whether the activity may be covered by presumptive taxation under section 44AD or should fall under the capital gains framework. The business is GST-registered and has disclosed turnover from the residential property sales in its GST returns.