Sir,
In case a person-
1. purchase old commercial building for 50 lakhs
2. gave 10 lakhs to two tenant to leave the shops in the buildings
3. demolish the building and reconstruct (3 floors) it for Rs. 20 lakhs
4. one floor he kept for his busines and another 2 floors sold ( While constructing ) for 20 lakhs.
In this case, whether sale of two floors considered as capital gain or business income? plz suggest .
Sale of two floors will be considered as Capital gains if you are not indulged in any business activity (for eg., like builder, if he purchase old building, demolish it and reconstruct and then sells it then it is a business income because it is his business) but if you are Not indulged in any business activity then Sale of two floors will be considered as Capital gains.
If the person is doing the total activity as a part of business then it will be considered as business income else it will be a capital gain. Any case we have to check the intention of the party like a builder does it on regular basis as a part of business.
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