Capital gain on rural agriculture land

This query is : Open

CA Mohit Goyal (Querist)
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23 June 2012 Dear All,

Whether capital gain arising on transfer of rural agriculture land is to be included in income of the assessee as 'Agriculture Income' for rate purposes.

Is there any case law in this regard.

Please help...

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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23 June 2012 1. Capital gain arising on transfer of rural agricultural land is AGRICULTURAL INCOME.

2. Agricultural income is defined in Section 2 as agricultural income means, inter alia, any rent or REVENUE derived from land which is situated in India and is used for agricultural purposes.

Revenue will include gain arising on transfer.

Accordingly, in my opinion, it should be included for rate purposes.

Views of other experts are invited.

CA Mohit Goyal

CA Mohit Goyal (Querist)
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23 June 2012 Thanx for your opinion sir....

As per section 2(1A), agriculture income means -
any rent or revenue derived from land which is situated in India and USED FOR AGRICULTURAL PURPOSES.

Can I Claim that the assessee was not using the land for agricultural purposes because in section 2(14) {Definition of Capital Asset} , there is no condition that the land should be actually used by assessee for agricultural purposes.

Only conditions are that it should be 8 Kms away from local muncipality, population should be less than 10000 etc.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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23 June 2012 Yes you can say that the land was NOT used for agricultural purposes and was a vacant land.

In that case, the gain shall NOT be agricultural income.

CA Mohit Goyal

CA Mohit Goyal (Querist)
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23 June 2012 Thanx Sir,

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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25 June 2012 As per Capital gain taxability capital gain arises on sale of Capital Assets and as per definition of Capital Assets Agriculture Land is not Capital Asset
So its Non Taxable
and its a capital Receipt therefore should not be included
its not a Rent or Revenue.

CA Mohit Goyal

CA Mohit Goyal (Querist)
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26 June 2012 Thanx Mr. Sourabh....

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