Capital gain on agriculture land

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This query is : Resolved

krunal (Querist)

11 March 2010 Dear Sir,
WE have purchased agri. land in fin. year 2004-05 and sold it in fin. 2008-09. Now our CA is telling following points:
(1) Since we have not used land in farming, (According to CA if we do not use the agri. land more than 2 year then the status of the land will be changed and we will not be able to take the rebate against purchase of new agri. land.
As we have purchased agri. land in fin. year 2008-09. So please give input on this.
(2) Now CA is telling this land will be considered for tax benefit u/s 54F where we can take the rebate against residential house, please confirm that this is OK or not?
(3) Can we adjust the profit for the previous purchase of agri. land.(which is not more than 1 year.)?
(4) can we adjust profit of agri. land to purchase residential house plus agri. land in both plus 54EC bond?

Pls. give inputs on all queries.

CA Robin Betala

CA Robin Betala (Expert)

11 March 2010 Hi Krunal
Capital Gain on rural agriculture land is exempt as its is not capital asset , whether agriculture on it is done or not.So first you should check whether it is rural land or urban land .

If its urban land then you are required to do agriculture on it for atleast 2 years to get an exemption under section 54B

Yes you can take benefit of sec 54F by purchasing Residential house , and satisfying all the condition of 54 F

For 54EC you are required to make investement in Bonds within 6 months so i think your time is over for that.

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