Taxable item

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 November 2011 X, A FARMER GETS A GOLDEN BUCKET WHILE (500 GR) PLOGHING HIS FIELD.THE MARKET VALUE OF THAT BUCKET IS RS.2CRORE. FARMER SOLD IT TO A JEWELLER FOR RS.20 LACS.

1.TELL ME WHAT IS FARMER IS LIABLE TO PAY TAX.
2.IF YES, CALCULATE NET TAX LIABILITY.

WHAT BASIS TO TAKE TAXABLE VALUE

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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30 November 2011 Farmers are quite intelligent and are not as ignorant as you are posing a farmer in your query.
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Have you seen any farmer who sales his jewellery or gold. Mostly they keep on purchasing the jewellery.
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The income is not taxable as it will be treated as merely a capital receipt for which cost of acquisition is not ascertainable or there is no cost of acquisition.
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Computational provisions can not process this type of transaction and as such no capital gain would arise to the farmer.

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