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Agriculture land sold to company

mayank rathore (student) (50 Points)

03 August 2016

hey kindly tell me if any agriculture land is sold to company whose purpose is to build and operate mall in this , so this will attract any tax liablity .

as i have consulted lot of proffesiaonls they are view that they are judgment and commentary which suggest that this transaction is taxable.

kindly share your opinion.

Mayank Rathore

9897085109

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2 Replies

Shreesh Kumar (CA Final) (122 Points)
Replied 03 August 2016

Dear Mayank,

Capital gain arising from of sale of any land whether agricultural or commercial is taxable. However as far as agricultural land is concerned you have got some relief from Government. You can avail exemption under section 54B of Income Tax Act 1961.

Conditions for taking exemptions are:

The agricultural land in the two years immediately preceding the date on which the transfer(sale) took place, was being used by the assessee being an individual or his parent, or a Hindu undivided family for agricultural purposes, and
Within a period of two years after that date of transfer(sale), purchased any other land for being used for agricultural purposes

Hence I can conclude that in your case capital gain arising from selling of agricultural land will be taxable however you can save tax by spending the capital gain amount in some other agricultural land.

The points to be kept in mind:

You will have to hold the new land for at least three years otherwise it will become taxable.

Since you have got 2 years to Invest capital gain amount therefore if you want to take exemption in the year of transfer itself, you can deposit this amount into a special bank account prescribed by central government.

Regards

Shreesh Kumar

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