Mr. Kapoor purchased a residential house in January, 2021 for Rs. 80,00,000. He sold the house in April, 2022 for Rs. 94,00,000. In this case the gain of Rs. 14,00,000 arising on account of sale of residential house will be charged to tax under which of the following head?

Option A: Income from capital gains

Option B: Income from house property

Option C: Income from profits and gains from business or profession

Option D: Income from other sources

Correct Answer

Option: a

Explanation

property of any kind held by an assessee, whether or not connected with his business or profession. Further, Section 45(1) provides that Any profits or gains arising from the transfer of a capital asset effected in the previous year shall be chargeable to income-tax under the head “Capital gains”, and shall be deemed to be the income of the previous year in which the transfer took place Thus, the gain of Rs. 14,00,000 arising on account of sale of residential house will be charged to tax under the head “Capital gains”.

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