capital gain

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Ca naveen nangalia (Querist)
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06 September 2010 i have sold an ancestral agricultural land.
but i have nt done any agricuture activities on it from many years, therefore not shown any agricultural income in my income tax return. will i get capital gain exempt or will i have to pay tax on the capital gain

please help as soon as possible

SANJAY TALATI

SANJAY TALATI (Expert)
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06 September 2010 As per sec. 2(14)(iii), capital asset does not include the agricultural land in India, which is not an urban agricultural land.

In a no. of cases it was held that the agricultural land does not depend on the use to which it is put to.

If the land was put to agricultural use for long period and the agricultural operations were temporarily suspended, the land does not cease to be agricultural .(Ranganatha Sastri(M) V. CIT

The use to which the transferee put the land is immaterial and not relevant. What is relevant is that in the hands of the transferor the land must be agricultural in nature at the time of transfer.

Hence, in the filing of the return , the fact that u have not shown the agri. income , does not make difference and the gain arises on the transfer of the agricultural land will still be exempt.

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