Question And Answer
Subject: agricultural land
Querist: bks
Answered by:
Tags: ,
Date: March 12, 2023
Query asked by bks

1] Is it necessary to have agri income to claim exemption from  capital gain tax  on sale of Agri land ?

2] Can it be contended that it was for self consumption?

3] IS book keeping and record keeping needed ?

case laws / sections ?

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Answer given by

In CIT v. Debbie Alrmao (2011) 196 Taxman 230/ 331 ITR 59 / 239 CTR 326 (Bpm)( HC) the Court held that if an agricultural operation does not result in generation of surplus , that cannot be a ground to say that the land was not used for agricultural purpose . In CIT v. Kalathingal Faizal Rahman. (2019) 416 ITR 311 (Ker.)(HC) the Court held that the burden is on the assessee to prove that the land was agricultural. In In PCIT v. John Poomkudy (2018) 409 ITR 149 / (2019) 261 Taxman 56 / 174 DTR 370 / 307 CTR 81 (Ker.)(HC) Purchase of agricultural land and sale of the said land after few years, not deriving any income or not making any improvement of land and intention to earn profit cannot be the sole test to treat the transaction as adventure in the nature of trade-Solitary instance of sale alone could not characterize the transactions as an adventure in the nature of trade.
Each case has to be analysied on facts of the case .

There is no requirement to keep books of accounts as agricultural income is exempt for claiming exemptions from sale of land capital gain when revenue records shows land is agricultural. However, it is desirable to maintain the primary records of bills etc .

In the case of CIT v. Ashok Kumar Rathi [2018] 404 ITR 173 (Mad)(HC) the Court held that land sold by assessee was entered as agricultural land in revenue records and Assessing Officer had accepted agricultural income declared from land in question, capital gain arising from sale of it could not be brought to tax.

In CIT v. Chandan Magraj Parmar [2022] 445 ITR 674 (Bom)(HC) the Court held that land sold was situated beyond 8 kms from local limits of any municipality or cantonment board, it would certainly not fall within definition of capital asset, hence there would not be any capital gain tax on said sale proceeds.

Disclaimer: This article is only for general information and is not intended to provide legal advice. Readers desiring legal advice should consult with an experienced professional to understand the current law and how it may apply to the facts of their case. Neither the author nor and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this article nor for any actions taken in reliance thereon. No part of this document should be distributed or copied (except for personal, non-commercial use) without express written permission of

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