Agricultural land as per income tax act

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KIRAN KOTAK (Querist)
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09 February 2014 If an Agricultural Land is Outside the limits of Municipality, then as per the Definition of Sec 2(14), it won't be treated as capital assets for Capital Gain Purpose. But if no agriculture operation is carried on the said land,then whether there will be same treatment? is it necessary to have agricultural activities on land to treat the same as agricultural land?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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09 February 2014 Land outside the municipal area can also be treated as a capital asset if it finds place within the area notified by the Central Govt. Please check the location at your end.
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In relation to an agriculture land, which is beyond all the prescribed urban limits U/s 2(14), though agriculture operations are not carried on such such land, it still remains an agriculture land and as such can not be treated as a capital asset.
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In my view, The restriction for use of land for the agriculture purpose is relevant only for exemption under Section 54B where the capital asset transferred is an Agriculture Land situated in an urban area.
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You may seek an expert opinion in this matter.

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