Pathak Harsha (Accounts) (36 Points)
01 August 2019Please let me that my agricultural land acquisitioned by government in Nov 2018 and the total amount paid to me INR 90L in my bank account. Now i have earned interest approx Rs. 70000 for fy 2018-19. Now where i have to show in ITR1 whole amount 90L and intt 70000/- please give your best opinion.
Yash Dharavat
(CA)
(36 Points)
Replied 01 August 2019
Let me answer this in two parts:
Treatment of Interest:
Interest will be taxable as Income from Other Sources at the normal slab rates applicable.
Treatment of Funds received on compulsory acquisition of agricultural land:
You first need to determine whether your agricultural land falls within the definition of agricultural land as provided under Section 2(14)(iii) (a) or (b). After that you need to go through the conditions provided under Section 10(37) and only if you fulfill them, you will be able to claim the amount as exempt. Otherwise, you may have to go through the capital gain provisions and pay relevant taxes on the same.
Pathak Harsha
(Accounts)
(36 Points)
Replied 01 August 2019
Yash Dharavat
(CA)
(36 Points)
Replied 01 August 2019
Below is the extract of the said Section:
2. In this Act, unless the context otherwise requires,—
(14) "capital asset" means—
(iii) agricultural land in India, not being land situate—
(a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand; or
(b) in any area within the distance, measured aerially,—
(I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or
(II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or
(III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh.
Explanation.—For the purposes of this sub-clause, "population" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year;
Only if the land you are referring to falls under the above definition, you can term it as an agricultural land eligible for exemption.
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