Capital gain sale of urban agriculture land by ganotiya

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2016 In 2011 sales urban agriculture land by Mr. X & Y as a land owner i.e first right( land in the name of Mr. X & Y in 7/12).
In sale agreement and also in 7/12 mention that Mr. Z as Ganotiay i.e second right in land (not owner of land) and for that Mr. Z received some amount as sale consideration .
Whether Mr. Z liable for Capital Gain as a relinquishment of right under income tax ?

Please give reply as soon as possible.

Thanks.

ABHIMANYU JHAMBA

ABHIMANYU JHAMBA (Expert)
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28 July 2016 Where is the land situated. Whether it falls within the jurisdiction of a municipality?
We would require to see the documents to advise further.

Abhimanyu Jhamba
9218999999

Querist : Anonymous

Querist : Anonymous (Querist)

30 July 2016 I already mention that Urban Agriculture land

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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18 July 2024 In the scenario described, where Mr. Z (Ganotiya) relinquished his right over urban agricultural land and received some amount as consideration, the tax treatment under Indian income tax laws would typically be as follows:

### Tax Treatment for Mr. Z (Ganotiya):

1. **Nature of Transaction:**
- Mr. Z relinquished his right in the urban agricultural land. According to Section 2(47) of the Income Tax Act, 1961, relinquishment of any right in a capital asset constitutes a transfer for the purposes of capital gains taxation.

2. **Capital Gains:**
- The consideration received by Mr. Z for relinquishing his right would be treated as capital gains under the Income Tax Act.
- Since Mr. Z was not the owner of the land but had a right (ganotiya) in it, the capital gain would typically be categorized as **Short-Term Capital Gain (STCG)** or **Long-Term Capital Gain (LTCG)** based on the period for which he held this right.

3. **Calculation of Capital Gain:**
- **STCG:** If Mr. Z held the right for 3 years or less before relinquishing it, the gain would be treated as STCG and taxed at applicable rates.
- **LTCG:** If Mr. Z held the right for more than 3 years, it would be treated as LTCG. LTCG is taxed at a lower rate and can also benefit from indexation to adjust the cost of acquisition for inflation.

4. **Exemptions and Deductions:**
- Similar to other capital gains, Mr. Z may be eligible to claim exemptions under sections like 54, 54F, or 54EC if he reinvests the consideration in specified assets like residential property or bonds within the stipulated time frames.

5. **Documentation and Compliance:**
- It's essential for Mr. Z to maintain proper documentation of the transaction, including the sale agreement and any receipts of consideration received.
- Ensure accurate calculation of capital gains and timely payment of taxes to comply with income tax laws.

### Conclusion:
Based on the relinquishment of his right in the urban agricultural land and receipt of consideration, Mr. Z (Ganotiya) would indeed be liable for capital gains tax under the Income Tax Act, 1961. The specific nature (STCG or LTCG) and the amount of tax payable would depend on the holding period of his right in the land. It is advisable for Mr. Z to consult with a tax advisor to correctly assess the tax implications, compute the capital gains, and ensure compliance with all relevant tax laws.