Compulsory Acqusition of Rural Agriculture Land

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pradip (Querist)
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24 July 2011 Is Compulsory acquisition of Rural Agriculture land liable to Capital Gain?

If yes then how to calculate?
and If No then how taxation work on amount/ compensation received from such acquisition in the hands of farmer?

which ITR form applicable to file return?
Please specify head under which such compenasation shown as income or exempt income

Thanks in advance

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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24 July 2011 Rural agricultural land is not a capital asset as per section 2(14)(iii) the Income tax Act,1961. Therefore, its transfer by any modes specificed in sevtion 2(47)of the said act need not be considerd for the purpose of income tax computation. Further section 194LA also stipulates that TDS provisions also does not attract on compulsory acquisition of rural agricultural land. In view of the above provisions, if the farmer does not have any other income which is in excess of the maximum amount which is not chargeable to tax, no need to file IT return.

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pradip

pradip (Querist)
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07 August 2011 Thanks sir,
But one case in my hand as follows:
1)Land Rural agriculture land
2)Acquired for highway Project by Goverment
3)TDS by govt on rs.394000/- at10.30% amounted rs. 39440/-
4)I file return as exempt income and claim for Tax Refund on entire TDS

is i m right?