Agri Land - Tax Exemption

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Balakrishnan (Querist)
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02 September 2010 There was a agricultural land in my friend's mother's name. His mother sold it for Rs.20,00,000 and had given to my friend ( he is the only son to her). But the amount mentioned in the sale document is Rs.1,50,000. He deposited the sale proceeds in his name and his son's name as Fixed deposit.He has a fear about the tax procedure related to this sale. kindly advise him in this regard.

CA PRAMOD SARAOGI

CA PRAMOD SARAOGI (Expert)
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02 September 2010 Your have not mentioned the amount of sale proceeds deposited in the name of your friend and his son. Was it Rs. 1.50Lacs or Rs. 20 Lacs . From your question it appears that a sum of Rs. 18.50 Lacs were received unaccounted.
At the first instance , your friend's mother has to pay capital gain tax if the agricultural land is an urban one and if it is a rural agricuultural land then no tax liability would arise.

The money deposited by your friend and his son out of the sale proceed would be treated as gift from Your friends mother. If your friends son is a minor then the income that would accrue to him would be added to the income of the parents having higher income.