Capital gains on agricultual land with in municipal limits
bhaskararao donepudi
(Querist) 29 January 2016
This query is : Resolved
sir
A,B, & C sold an agricultural land with in municipality limits, in 2007,on GPA basis to X & Y amount of Rs 15.00lakhs(full consideration received), in 2010 the registration regularized by them with cost 15.00lakhs, but stamp duty paid on of Rs 35.00lakhs, because of value of property hiked by State Govt, but ITO objection its not Agricultural land, capital gain tax imposed on 35.00 lakhs,should liable in this and its capital asset, but still today cultivation is running on this land, so I request A,B, & c has tax liability or not,
rajagopal.s
(Expert) 29 January 2016
Dear Mr.Bhaskar Rao,
If the stamp duty paid on valuation of Rs35Lakhs, then capital gains will be applicable on stamp duty valuation amount only.
Section 2(14) of the Income Tax Act, 1961 defines Capital Asset. This section provides that capital asset does not include agricultural land in India. However, the following agricultural land are considered as capital asset:-
(a) agricultural land situated within the jurisdiction of municipality or cantonment board and having a population of 10,000 or more
(b) agricultural land situated within the following distance from the local limits of Municipality or Cantonment Board to be measured aerially.
For the purpose of this subclause “population” is defined to mean population according to the last preceding census of which the relevant figures have been published before the first day of the financial year.
The distance from municipality is required to be measured aerially i.e. by crow’s flies and not by approach road. Therefore, even if by approach road the distance is more than specified limit but when measured aerially it is less than the specified limit, it will
be treated as agricultural land.
Therefore, any agricultural land situated within the above area and held as investment is a capital asset liable for capital gain tax
Rajendra K Goyal
(Expert) 29 January 2016
Well explained by the expert, agree to it.
