Mr. Anjan, a property dealer, sold a flat in Mumbai, the stamp duty of which is 2 crores for 1.80 crores to his friend Mr. Ashwin, a college…

CA Final · Direct Tax Laws and International Taxation · MTP · January 2026
Mr. Anjan, a property dealer, sold a flat in Mumbai, the stamp duty of which is 2 crores for 1.80 crores to his friend Mr. Ashwin, a college lecturer. Mr. Anjan had purchased the flat one year back for 1.50 crores and the stamp duty value on that date was also - 1.50 crores. What are the tax implications of such sale?
(A) 50 lakhs would be taxable as short-term capital gains in the hands of Mr. Anjan. There would be no tax implication in the hands of Mr. Ashwin
(B) 50 lakhs would be taxable as business income in the hands of Mr. Anjan. There would be no tax implication in the hands of Mr. Ashwin
(C) 50 lakhs would be taxable as business income in the hands of Mr. Anjan and 20 lakhs would be taxable as income from other sources in the hands of Mr. Ashwin
(D) 50 lakhs would be taxable as short-term capital gains in the hands of Mr. Anjan and 20 lakhs would be taxable as income from other sources in the hands of Mr. Ashwin

Suggested Answer and Working Notes:

Correct Answer: Option (C)

50 lakhs would be taxable as business income in the hands of Mr. Anjan and 20 lakhs would be taxable as income from other sources in the hands of Mr. Ashwin

Topics: Double Taxation Relief, Capital Gains, Non-Resident Taxation

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