Ankush (Student) (1369 Points)
21 May 2017
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(183108 Points)
Replied 21 May 2017
Any profit arising from sale of a capital asset would be chargeable to income tax under the head ‘capital gains’ and shall be deemed to be the income of the year in which the transfer took place. Therefore, capital gains would arise only on sale of capital asset. As per Section 2(14) of the Income Tax Act 1961 ‘capital asset’ excludes ‘agricultural land’ situated outside the specified area. If the land is situated outside the specified area, then the land would be considered as “agricultural land” and hence would not be considered as “capital asset” for purpose of computation of capital gains.
Agricultural land was earlier defined to mean land not situated in any area within the jurisdiction of a municipality or cantonment board having population of not less than ten thousand or in any area within such distance not exceeding eight kilometers from the local limits of any municipality or cantonment board as notified. For that purpose, the Central Government had issued notification no SO – 9447 dated 06/01/1994. Any transfer of agricultural land falling within the relevant distance of the cities mentioned in the notification would be subject to capital gains tax.
For latest amendment in specified area refer finace bill, 2013.
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