Mr. Raghav, a retail trader, sold a residential house to Mr. Varun, a wholesale trader for 50 lakhs on 1.2.2026, when the stamp duty value was 70…

CA Final · Direct Tax Laws and International Taxation · MTP · May 2026
Mr. Raghav, a retail trader, sold a residential house to Mr. Varun, a wholesale trader for 50 lakhs on 1.2.2026, when the stamp duty value was 70 lakhs. The agreement was, however, entered into on 1.8.2025 when the stamp duty value was 55 lakhs. Mr. Raghav had received a down payment of 5 lakhs by a crossed cheque from Mr. Varun on the date of agreement. Mr. Raghav has purchased the building for 32 lakhs on 17.8.2024. What is the amount of income chargeable to tax in the hands of Mr. Raghav in respect of the transaction of sale of residential house to Mr. Varun and under which head is it taxable?
(A) 18 lakh is taxable as short-term capital gains
(B) 23 lakh is taxable as short-term capital gains
(C) 38 lakh is taxable as short-term capital gains
(D) 18 lakh is taxable as his business income

Suggested Answer and Working Notes:

Correct Answer: Option (C)

38 lakh is taxable as short-term capital gains

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

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