Capital gains on transfer of agricultural land in rural area

Tax queries 323 views 3 replies

Laavnaya Chandressh

Proprietor

25 Points Posted on 16 February 2016

Facts of the Case:-

The land is an agricultural land which is an inherited property from forefathers.
The land was aquired by Karnataka Housing board under a joint venture agreement in proportion of 60 :40.
The land owners received plots under the scheme , but the same has not been registered by KHB to land owner , only a mutual agreement made.
The land owners has sold 2 plots to buyers with a sale agreement.
The owners have received advance and not sale consideration.
The advance received has been lent to one of the joint owner to buy a commercial property.

Please state the tax implication of above transaction.How the capital gains will be taxed?

Replies (3)

CMA Poornima Madhava

CMA

13117 Points Posted on 16 February 2016

If the agricultural land is situated in rural area (as per definition), then no CG is taxable on transfer of such land.

U can check the link to know whether in rural area or not: https://www.incometaxindia.gov.in/Pages/utilities/Agriculture-Land-in-Urban-area2014.aspx

Laavnaya Chandressh

Proprietor

25 Points Posted on 16 February 2016

The said land has been aquired by the housing board society..so dont u think it will become a commercial land?

And onky advance is received and not sale consideration.

CMA Poornima Madhava

CMA

13117 Points Posted on 16 February 2016

I said so because it was mentioned as agricultural land in rural area. If we just go by treatment of transfer of agricultural land in rural area (leaving all other matters), then such gain would not be taxable. So can we not say that these are series of transfers between various parties and as the property is not covered under definition of capital asset, no CG is taxable?