Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Agriculture land income rule ??

shobhit (aa) (339 Points)

07 January 2017

FRIENDS,

ONE OF MY CLIENT OF WHOM I AM GOING TO FILE ITR HAS SOME QUERIES..PLEASE RESOLVE THE SAME.

1. HE HAS 40 BEGHA LAND.... HE HAS SHOWN RS 150000 INCOME IN HIS AY 15-16 RETURN. HE WANT TO SHOW THIS INCOME UPTO RS. 5 LAKHS.....I AM AGREE TO SHOW THIS INCOME AS HIS BUSINESS INCOME IS RS.227000.SO HE IS STILL IN A NON TAXABLE PORTION.....

BUT HIS QUESTION IS THAT HE HAS HEARD SOME WHERE THAT THERE IS A GOVT RULE THAT FOR ANY PARTICULAR AREA OF LAND U CAN NOT SHOW INCOME BEYOND A CERTAIN LIMIT... FOR EXAMPLE U CANNOT SHOW CRORE OF INCOME IN A 40 BEGHA LAND...

I HADNT HEARD ANY GOVT PROVISION REGARDING THIS...PLEASE RECTIFY ME IF I AM WRONG SOMEWHERE...ALSO ADVICE ME REGARRDING FILING OF THAT RETURN FOR AY 16-17.

Reply
Follow
Share

7 Replies

Shobhit Chauhan (2 Points)
Replied 07 January 2017

Though am not an expert in the field but general suggestion as per my understanding and knowledge is that there is no fixed rule for this but in case if any suspicions, the person will have to justify how he earned so much of profit from a small or specific piece of land. 5 Lakhs in 40Bigas is a little high going by general estimates bug then being a finance person you should be able to suggest him.to justify this income if asked to.

shobhit (aa) (339 Points)
Replied 07 January 2017

THANX SHOBHIT SIR FOR YOUR REPLY...

AS I HAVE SEARCHED GOOGLE ALOT REGARDING THAT POINT BUT FOUND NOTHING ABOUT THAT QUERY..

AS FAR AS 5 LAKHS INCOME IS CONCERNED I WILL SUGGEST HIM THE SAME U HAVE EXPLAINED...OR I WILL SUGGEST HIM TO SHOW THE EXACT AGRICULTURE INCOME...

Mukesh Kumar (Accounts Manager) (1466 Points)
Replied 08 January 2017

SHOBHIT, ,,,,,,,,,first you should know the agricultural land is situated beyond the Specified Area. ,,,,,,,,,,,,,,,,,,,,,, Specified Area means: 1. any area which is from away the jurisdiction of a municipality which has a Population of not less than 10,000;,,,,,,,,,,,,,,,,, 2. Any area within the distance specified hereunder measured AERIALLY from the limits of such municipality or Cantonment Board: ,,,,,,,,,,,,,,,,,,,,, ,3. Population more than 10,000 upto 1 lakh, distance from limits is 2 kms.,,,,,,,,,,,, 4.Population more than 1 lakh upto 10 lakh, distance from limits is 6 kms.,,,,,,,,,,,, 5 Population more than 10 lakh, distance from limits is 8 kms.

chetan (akola) (56 Points)
Replied 08 January 2017

HE CAN SHOW ANY INCOME OF THE LAND MUST BE IRRIGATION LAND AND SECOUNDLY HE SHOULD HAVE PROPER BILLS OF WHAT HE HAD SOLD AND PRODUCE FROM THE LAND.. EVEN I AM LEGALLY EARNING 40LAKHS FROM 3 ACRES LAND WHICH IS IRRIGATION.. SO DONT WORRY ABOUT IT

A.Gopal (Partner) (63 Points)
Replied 09 January 2017

What is offered has to be real income from "Agricultural" activity capable of falling under the definition of Sec 2(1A).

If assessment is taken for scrutiny and the claim for exemption is not proved, the amount offered will be assessed under "Other Sources" dissallowing the claim for exemption.

Such an addition will make the assessee liable for tax with consequential levies of interest and penalties.

Also, if agricultural cultivation in an extent of 40 BEGHAS will not be worth demanding a sale price of Rs.5 Lakhs, then also the assessing officer may restrict the claim for exemption based on his assessment either after questioning the assessee or by making enquiries in relation to yield from other lands in the same vicinity.

Therefore,to the extent of acceptable amount of Claim as relating to Agricultural activity Income is always exempt.As under the Constitution,the power to leivy Tax on Agricultural Income is rested with State and not with the Centre.However,Courts have helped that Gain on sale of agricultural land is not agricultural income but liable for tax under The Income Tax Act,under the head "Capital Gain".

However,exemptions from capital gains on sale of agricultural land is available under Sec2(14) r.w. 2(47A) of the Act. But it is only in relation to agricultural lands which are not in an "urban area".

Location of the land, population of the locality and distance of the land measured aerially from the nearest municipality are all factors which determine whether agricultural land is eligible for exemption under sec 2(14) r.w. sec 2(47A) of the Act.

Gopal

Jagdish Mandowara (Manager- Accounts) (23 Points)
Replied 09 January 2017

I think, being professional we should ask client to report the factual Income, whether it may be 1 lac or 5 lac per biga. some justification can be generated considering type of crop, it's market price, whether condition etc...

shobhit (aa) (339 Points)
Replied 09 January 2017

First of all i would i like to thank all that has participated in this discussion...i also agree with all of your suggessions...

Actually i am also aware abt the law, specially what income tax say abt the agriculture income treatment..

But my point was in which act it is defined that we can show upto that income and cant beyond that..that was the query raised by my client.....i said there is no such prov in incometax and if there is something like that i will consult my friends and tell u later.