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2012 (9) TMI 687 - ITAT INDOREAssessee held agriculture land – Whether sale of shops, duplex & bungalow developed on agriculture land by developer under agreement amount to business income under head PGBP or Capital Gain - Assessee enter into agreement with 2 builders for construction of housing complex on such land and receive advance - In consideration of land, the builder has agreed to give 35% & 33% of constructed area – AO made addition on sale consideration as business income treat it as trading activity – Held that:- Since land was used for agricultural purpose hence capital asset. Once the assessee has entered into agreement with the builder for construction of housing complex on such lands, the same amounts to business, therefore, any gain arising out of sale of such building is business receipts liable to tax as business profit. The benefit of long term capital gain till the date of transfer of such capital assets into stock in trade i.e. year in which agreement with the builder is entered into. As per Sec. 45(2), such capital gain is liable to tax in the previous year in which such stock in trade is sold or otherwise transferred by the assessee. Issue remands back to AO for recompute capital gain and business income.
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