Sec 115jb
This query is : Resolved
14 September 2012
A company has sold agricultural land. Being an agricultural land, no capital gain would be levied. But is MAT u/s 115JB applicable on the same or not?
14 September 2012
Hey as per my view U/s 54 B It will be allowed to only Individual & HUF not to Co. , so in which Section u r Claiming that co.have no Capital Gain ????
14 September 2012
I agree with mr ankur, . Sec 54B exemption is available to individual only.
14 September 2012
I agree with mr ankur, . Sec 54B exemption is available to individual only.
14 September 2012
Mr. Ankur & Mr. Pankaj, Under the provisions contained in the Income-tax Act 1961, capital gains tax is payable whenever profit is derived on selling a capital asset. However, agricultural land in India under certain facts and circumstances is not treated as capital asset as per the definition contained in section 2(14) of the Income-tax Act 1961.
The simple theme is if an item which is sold is not considered as a capital asset. In that situation any gain arising therefrom will not be subjected to income-tax.
Correct me if i am wrong.
The simple theme is if an item which is sold is not considered as a capital asset. In that situation any gain arising therefrom will not be subjected to income-tax.
Correct me if i am wrong.
15 September 2012
Swasti.....pls clarify if I am wrong if I say that agriculture land is treated as a capital asset in the hand of a co. and therefore its sale its taxable in hands of co.
17 September 2012
Mr. Pankaj .... As per definition given in Sec 2(14)(iii), agricultural land in India is not a capital asset for an assessee. Now assessee covers both individual as well as company. So as per my understanding, it is not a capital asset in the hands of a company engaged in agricultural activities only. If there is any other provision, please let me know.
18 September 2012
Thanks for the clarifications...
19 September 2012
But my query on the matter has been perhaps subsided - Is there MAT liability on Agricultural land sold by a private limited company? Could anybody please clarify this?
23 July 2025
The issue you are raising is whether **Minimum Alternate Tax (MAT)** under **Section 115JB** of the Income Tax Act applies to income from the sale of **agricultural land** by a **private limited company**.
Let's go step by step to address your query:
### 1. **Agricultural Land and Capital Assets:**
As per **Section 2(14)(iii)** of the Income Tax Act, **agricultural land** in India is **not considered a capital asset** under certain conditions:
* **Agricultural land in rural areas**: It is not a capital asset and thus the sale of such land does not attract **capital gains tax**.
* **Agricultural land in urban areas**: It may be considered a capital asset, and thus **capital gains tax** may apply if sold.
However, the key point is whether agricultural land is a **capital asset** in the hands of the company.
* In the case of **companies** engaged in agricultural activities, agricultural land **may not be treated as a capital asset** under **Section 2(14)**.
* If the company is not involved in agricultural activities, and the land is situated in **urban areas**, it would be treated as a capital asset and **capital gains tax** would apply.
### 2. **Impact of Section 115JB (MAT):**
* **Section 115JB** imposes **MAT** on book profits for companies, which is calculated based on the profits as per the company’s profit & loss account, with certain adjustments.
* For the purpose of calculating **book profit under Section 115JB**, if the company has any **income** from agricultural land, the exemption under **Section 10** (agricultural income) is **not deducted** from the book profit. This means **MAT is still applicable** on the book profit.
### 3. **Agricultural Land Sale by a Company:**
* **Sale of agricultural land by a company** is **not exempt from MAT** just because the land is agricultural.
* **Section 115JB** requires the company to compute book profit, and this computation is **not affected by agricultural income exemptions** under **Section 10**.
* Even if the sale of agricultural land in rural areas does not result in taxable income, it will still be considered **in the computation of book profit for MAT**.
### 4. **Conclusion:**
* **MAT is applicable** on the sale of agricultural land by a company because it is **included in the calculation of book profit**.
* Even though the sale of **rural agricultural land** is **not subject to capital gains tax**, it will still be part of the **book profit** calculation under **Section 115JB** and **MAT will apply**.
Therefore, while **agricultural income** may not be taxed under normal provisions (capital gains in the case of land in rural areas), **MAT will still be levied on such income** when calculating book profits under **Section 115JB**.
Let me know if you need more clarification on any of these points!
Let's go step by step to address your query:
### 1. **Agricultural Land and Capital Assets:**
As per **Section 2(14)(iii)** of the Income Tax Act, **agricultural land** in India is **not considered a capital asset** under certain conditions:
* **Agricultural land in rural areas**: It is not a capital asset and thus the sale of such land does not attract **capital gains tax**.
* **Agricultural land in urban areas**: It may be considered a capital asset, and thus **capital gains tax** may apply if sold.
However, the key point is whether agricultural land is a **capital asset** in the hands of the company.
* In the case of **companies** engaged in agricultural activities, agricultural land **may not be treated as a capital asset** under **Section 2(14)**.
* If the company is not involved in agricultural activities, and the land is situated in **urban areas**, it would be treated as a capital asset and **capital gains tax** would apply.
### 2. **Impact of Section 115JB (MAT):**
* **Section 115JB** imposes **MAT** on book profits for companies, which is calculated based on the profits as per the company’s profit & loss account, with certain adjustments.
* For the purpose of calculating **book profit under Section 115JB**, if the company has any **income** from agricultural land, the exemption under **Section 10** (agricultural income) is **not deducted** from the book profit. This means **MAT is still applicable** on the book profit.
### 3. **Agricultural Land Sale by a Company:**
* **Sale of agricultural land by a company** is **not exempt from MAT** just because the land is agricultural.
* **Section 115JB** requires the company to compute book profit, and this computation is **not affected by agricultural income exemptions** under **Section 10**.
* Even if the sale of agricultural land in rural areas does not result in taxable income, it will still be considered **in the computation of book profit for MAT**.
### 4. **Conclusion:**
* **MAT is applicable** on the sale of agricultural land by a company because it is **included in the calculation of book profit**.
* Even though the sale of **rural agricultural land** is **not subject to capital gains tax**, it will still be part of the **book profit** calculation under **Section 115JB** and **MAT will apply**.
Therefore, while **agricultural income** may not be taxed under normal provisions (capital gains in the case of land in rural areas), **MAT will still be levied on such income** when calculating book profits under **Section 115JB**.
Let me know if you need more clarification on any of these points!
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