16 April 2012
Dear expert, One of my client (an agriculturist) has received an letter from Income tax department, asking him the account of Rs. 33 lacs deposited in saving a/c in FY 2008-09, on basis of information furnished by bank in AIR. Infact, in FY 2008-09 he was migrating from his native village to another village by selling his agriculture land, tractor and milk animals etc. And in respect of FY 2008-09 his trasactions are as follows -
1. He sold his agriculture land (which is far from the 8 Km. of municipal area)for Rs.22 lacs in cash in Oct. 2008. However on the stamp papers the sale consideration is Rs. 18 lacs, in accordance with circle rates.
2. Sell of his tractor for Rs. 4 lacs in cash and in hands of his relative.
3. Sell of his milk animals for Rs. 2 lacs in cash.
4. During the FY he received the payment of sugarcane crops of about Rs. 5 lacs in cash.
The all amounts of above transactions were deposited by him in his saving a/c in fy 2008-09. And after six months of sell of land, he purchased an agriculture land in other village within same FY. Please advise, how he should defend his matter and answer in responce of said intimation. Thanks in advance.
16 April 2012
Agriculturist are the persons who are enjoying tax benefits and income tax act is very friendly to them. . Explanation for the amount deposited can be suitably drafted by describing the legal consideration for land, tractor, animals etc. Also explain the cost of tractor and of animals incurred by him. You may also show certain part of deposit as accumulated agriculture income of earlier years in case required for the purpose of explanation by omitting those items for which suitable explanation is not available. .
17 April 2012
First of all Agricultural land is not a capital asset. Hence, gains on sale of agrictultural land will not be taxable. Also agricultural income will not be taxable. However, sale of Vehicle and Cattle will be subject to tax. Draft a suitable reply mentioning the details of the said transactions.
CAclubindia
