Sec.2 (14)

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..... Sec.2 (14)
Query (Issue) Started By: - KALAYAN SINGH ADHIKARI Dated:- 26-9-2011 Last Reply Date:- 29-9-2011 Income Tax
Got 2 Replies
Income Tax
Sir, I am a govt. servant. I am paying income tax and filed income tax return. I have a ancestral agricultural land in rural area which is 1o km far from manciple area. In the year 2009 I sold a piece of this land sum of Rs. 16.3 Lakh. In th .....

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..... is regard, I have to need to some quarry. Whether I have to pay income tax on this sale? or exempted? Whether I have to show this amount in income tax return? If I have to pay income tax, up to what amount? It is, therefore, requested that kindly inform me. Thank u very much. KS ADHIKARI Reply By Sachin Agarwal: The Reply: Dear K S Adhikari, Rural Agriculture LAnd is not Capital Asswt as .....

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..... per Section 2(14) of Income Tax Act, 1961. therefore you are not required to pay income tax on profit on sale of rural agriculture land. Thanks Sachin Agarwal Reply By DEV KUMAR KOTHARI: The Reply: Rural agricultural land which is 10 km far from munciple area is not a capital asset, therefore excess of sale value over cost / indexed cost will not be taxable as capital gains. However, you need .....

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..... to establish these facts and also that land was agricultural land and used as such. It was not in process of development for selling, in that case AO may try to treat gains as business income. The income need to be shown under column fo rexempted incomes. In case taxable - due to non agricultural use - take fair market value as on 01.04.1981 (I hope it was acquired before that date by your lin .....

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..... eally ascendents) apply cost inflation index to FMV workout LTCG -tax will be @ 20% on such gains. If AO treat it as business income then LTCG will be computed based on market rate as on conversion, and normal rate of tax will apply on business income after considering conversion of capital asset into capital asset.
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