Sale of agricultural land

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 November 2012 one of my Clint is doing realestate business. he sold some of his agricultural lands acquired for resale. He claimed exemptions from profit from the sale. The department disallowed the his claim. Is the department is right or my client is right. please clarify. thanks in advance.

CA Roshan Jha

CA Roshan Jha (Expert)
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27 November 2012 If the agricultural land is in rural area than it is exempt, otherwise it it taxable.

CA. Gireesh Tawri

CA. Gireesh Tawri (Expert)
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27 November 2012 Agricultural Land does fall not under definition of capital Asset under section 2(47) of Income Tax Act.
How ever Agriculture land kept as Stock in trade does not attract exemption from Tax because it does not fulfill the requirement to become a land, an agriculture land, more over sale of Stock in Trade is taxable under the head Income from Business (PGBP) hence contention of Income Tax Officer is correct and your client cann't avail exemption.

Prakash Kochar

Prakash Kochar (Expert)
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29 November 2012 If transaction of purchase and sale of agricultural land is treated as adventure in trade, same will be liable for capital gain.
Agri. land purchased by assessee as an investment and agri. operations are continuously done, it may not attract capital gain, if out of notified area.
Depends on circumstances and facts of case depending on Number of transaction and holding period.