exempted profit from sale of agricultural land

Capital Gain on sale of agriculture land which is excluded from the definition of Capital Assets [Sec. 2(14)] is a capital receipt and not taxable u/s.45. It is not to be shown as agriculture income for rate purpose as it is a capital receipt and not an income as defined u/s.2 (1A). It is also not an exempt income as prescribed in Sec.10. Hence, it is not required to be shown in ITR as exempt income.

Agricultural income can be under no circumstances be lunked to sale of land used for such purpose..

Situations arising out of sale of Agricultural land can be of 3 types for IT Act-

a. considered as capital asset- In this case tax will be under the head of capital gains. This is because all assets are capital assets.

b. not included in the definition of a capital asset.- In this case the nature of income is actually capital receipt and will not come under the perview of sec. 45 as stated by Mr. Shah.

c. exemption u/s 10(37) for compulsary acquisition by the govt. However in this case u have to show the income as exempted income