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TMI BlogCapital gain on rural agricultural landX X X X Extracts X X X X X X X X Extracts X X X X ..... A businessman purchases a rural land which is outside the presribed limits of a municipality for qualifying as rural land. Before selling, the seller used the land for agricultural operations for many years. But the businessman or his parents have not done agriculture either on this land or any other land throughout their life. The businessman sells the land within 1 year of purchase. Is capital g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain arising on this sale is exempt for this land being not a capial asset. Is this land a rural agricultural land. - Reply By GOPALJI AGRAWAL - The Reply = To my view, there is as such no requirement of actual cultivation of land for for qualifying the land as agricultural land. If the agricultural land has not been put to use for any purpose other than agricultural,then it would be agricultural l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and provided other conditions are met out. - Reply By DEV KUMAR KOTHARI - The Reply = I agree with reply of Shri Gopal Ji. However, you should also establish that land was acquired for use as agricultural land and an items of fixed asset and not as an item of stock-in-trade. One year lull in agricultural operation will not change character of agricultural land. however in case some steps have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n taken to develop or convert the land for other purposes and activity seems to be an activity in nature of trading venture, then the AO may regard the income as income from business. The land must be distinctly shown under head Fixed Assets- Rural agricultural land in balance sheet. It must be stated at cost. There should not be efforts and cost to improve land other than as agricultural land. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Costs incurred for improvement of land as agricultural land for better agricultural practices, better yield like soil testing and enrichment, drainage system, irrigation. and can make your case better and beyond doubt. In case buyer use the land for agricultural purposes, it will be a case of continued agricultural operation. in case buyer use the land for non agricultural purposes, these fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor can be considered against assessee by the AO. In case businessman is in property business, the transaction can be considered as a trading transaction. - Capital gain on rural agricultural land - Query Started By: - manoj gupta Dated:- 21-6-2010 Income Tax - Got 2 Replies - Income Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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