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Tax is chargeable on the capital gains arising from the transfer of a 'capital asse' u/s 45 of the Income-tax Act, 1961. - Income Tax - 1014/CBDTExtract INSTRUCTION NO. 1014/CBDT Dated : September 30, 1976 Section(s) Referred: 2(14) Statute: Income - Tax Act, 1961 Under Section 45 of the Income-tax Act, 1961, tax is chargeable on the capital gains arising from the transfer of a 'capital asset'. The term 'capital asset', as defined in section 2(14) of the Act, does not include agricultural land in India, not being agricultural land situated in the areas mentioned in section 2(14) (iii) (a) and (b) of the Act. 2. The Board have examined the question whether rubber trees standing on agricultural land would come within the purview of the term 'agricultural land'. The Board are of the view that rubber trees standing on agricultural land cannot be regarded as agricultural land. Hence, profit arising from the transfer of such trees will be chargeable to tax under the head "capital gains". In this connection, attention is also invited to the decision of the Kerala High Court in the case of Travancore Tea Estate Vs. C.I.T. (93 ITR 314).
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