Agricultural income

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Querist : Anonymous

Querist : Anonymous (Querist)

24 October 2013 Is income from agricultural activities on a diverted land (diverted for industrial use) exempt under Income Tax Act or is it taxable under the head "Income from Other Sources"? Any case laws on the same?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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24 October 2013 if the activities are not in agriculture in nature, then no exemption shall be available. Whether the income is taxed under Business/profession or other sources shall depend on the facts on the case.

Querist : Anonymous

Querist : Anonymous (Querist)

26 October 2013 Nikhil ji, the land is diverted but till the industrial activities take place, agriculture is done on it. Now the land is not of the character of agricultural land but still if agriculture like cultivation of soyabean is done on it, will it be agricultural income and free from tax?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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26 October 2013 Please understand how the agriculture income is exempted in the Indian tax law:

1. The activities should be covered under Section 2(1A), clause a, b and c.

2. Agriculture on any land won't be exempted. It has to be a land covered under proviso (ii) to the Section 2(1A) ie

A) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board and which has a population of not less than ten thousand 10a[according to the last preceding census of which the relevant figures have been published before the first day of the previous year]

B) in any area within the distance, measured aerially,—

(I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and which has a population of more than ten thousand but not exceeding one lakh; or

(II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and which has a population of more than one lakh but not exceeding ten lakh; or

(III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and which has a population of more than ten lakh.

So if the land you have referred to comes under the above definition, then it may get exempted. Else no.

Querist : Anonymous

Querist : Anonymous (Querist)

30 October 2013 Nikhil ji, thanks a lot for your valuable suggestion. Actually the land does not falls within the municipal limits and also the population of the village where the land is situated is less than 10 thousand. But the land has been diverted for industrial purposes and for mining purposes. Till the industrial / mining work starts, if agricultural activities are performed (on the diverted land), is it exempted?

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