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Capital gain on land

Prasobhkumar R. (Chief Operating Officer) (67 Points)

26 April 2016

A person from a rural village much away from muncipal limit, is a farmer, as per the notice of the district collector agrees to transfer his agricultural land for road construction. The land was acquired on 01.06.2014 by the district collector for a total compensation of Rs.50,00,000/-. He was given Rs.45,00,000 and deducted Rs.5,00,000 as TDS (u/s194LA). The property was a ancestral land given to him by his father before 1.4.1981. His other income source is only from agriculture. He wants to get the refunf of Rs.5,00,000/-.

Please suggest the ITR, and advise me the way to fill the details of his income. I am sure that without any income an IT return is defective. Please suggest a solution.

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12 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 28 April 2016

?????

so prior to selling the land , the person was not working at all? and has zero income?

how cound he survive with zero income?

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Prasobhkumar R. (Chief Operating Officer) (67 Points)
Replied 28 April 2016

Yes he is living with his son and who is employed. This guy is a petty farmer.

Vinay somani (CA, CS) (Assistant Manager-Accounts) (549 Points)
Replied 28 April 2016

Please file the income tax return with NIL Taxable income and get refund of TDS.

Prasobhkumar R. (Chief Operating Officer) (67 Points)
Replied 28 April 2016

If it files with NIL income it is always defective return

Toireasa Thor (UI Developer) (12 Points)
Replied 28 April 2016

Please file the income tax return with NIL Taxable income and get refund of TDS

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Prasobhkumar R. (Chief Operating Officer) (67 Points)
Replied 28 April 2016

Pl. answer to the point if you can

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 28 April 2016

- 194LA does not applies on agricultural land, its applied on öther than agricultural land"

- if the person has NIL income, then what income did he claimed for PAN? because PAN is not issued for exempted income earners,

- to claim TDS, the assesee has to declare a Bank account, where interest income is earned, ( a single rupee interest is also an income)

Madhav rao (Article assistant ) (28 Points)
Replied 02 May 2016

Hi Prasobh,

Please file a Return in form no. ITR 2, and claim the TDS deducted. As per my opinion, since the land was far away from the Municipality, it is a rural agricultural land in terms of Section 2(14). Accordingly, Section 194 LA which relates to deduction of Tax at Source on acquisition of certain immovable property does not apply and TDS should not have been deducted. Request you to kindly cross check with Form 26AS of the Farmer.

Section reference :

Payment of compensation on acquisition of certain immovable pro-perty77.

194LA. Any person responsible for paying to a resident any sum, being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land), shall, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax thereon:

Provided that no deduction shall be made under this section where the amount of such payment or, as the case may be, the aggregate amount of such payments to a resident during the financial year does not exceed two hundred thousand rupees.

Explanation.—For the purposes of this section,—

(i) "agricultural land" means agricultural land in India including land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2;

(ii) "immovable property" means any land (other than agricultural land) or any building or part of a building.

Regards,

Madhav

Prasobhkumar R. (Chief Operating Officer) (67 Points)
Replied 02 May 2016

But still the acqusition is done by government and they are deducting TDS regardless of the status of Agricultural Land.

Prasobhkumar R. (Chief Operating Officer) (67 Points)
Replied 02 May 2016

Mr.U S Sharma, I am asking a real situation. Please understand. I am not looking for a bug fixing, instead a professional answer

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Madhav rao (Article assistant ) (28 Points)
Replied 02 May 2016

Hi Prasobh,

In such a case, you shall be entitled for refund, as the provisions of this Section do not apply to this case. Ideally, there should have been no deduction, but since it is, you can claim the refund for the same.

I would still advise you, to contact your Jurisdictional AO/Commissioner for this case and act accordingly.

Best Regards,

Madhav

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 02 May 2016

@ Prasobh

filing the ITR for refund of TDS is normal process and ITR is not defective under law, as there are certain other little incomes also, like bank interest etc,