CA Intermediate · Taxation · Basic Concepts
Under the Income-tax Act, 2025, which of the following is a capital receipt in the hands of the recipient, and hence not income unless specifically taxed?
The amount received on sale of the shop building used as a fixed asset is a capital receipt. Rent, sale proceeds of stock in trade and agent's commission arise from regular business or letting activity and are revenue receipts, so they are ordinarily taxable as income.
- ARent received by a landlord from letting a building
- BAmount received by a trader from sale of stock in trade
- CCompensation received by a shopkeeper for sale of the shop building which he used as a fixed assetCorrect
- DCommission received by an agent
Explanation
Receipts from disposal of fixed assets are capital in nature, though gains may be taxed under capital gains. Rent, sale of stock and commission are revenue receipts arising from regular operations.
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