| Question And Answer | |
|---|---|
| Subject: | Character of land at the time of sale- Agricultural land converted as NA -Capital gains -Valuation? |
| Category: | Income-Tax |
| Querist: | Ravi aiftp |
| Answered by: | Chartered Accountant ., Mr . H. N. Motiwalla |
| Tags: | Agricultural land, converted as NA, valuation |
| Date: | January 13, 2024 |
A is holding rural agricultural land since before 2001. Subsequently he has converted such land as NA land and now sold it. Question is which value should be consider for 2001? Agriculture land value or NA land value? Any other suggestion for computation of capital gains.
At the time of sale it is Non Agricultural land. Therefore the value of land in 2001 should be considered as Non Agricultural land, as it was converted in 2001 as Non Agricultural Land. Before 2001 it was rural agricultural land but that has no significance after conversion.
Thus non agricultural land is a ‘capital asset’ within S. 2(14) of the Act, hence, it is to be decided having regard to the facts prevailing at the time it is transferred and not at the time it was acquired as per M. Venkatesar v. CIT [144 ITR 886 (Mad)]
In Sarifabibi Mohamed Ibrahim & Others v. CIT [204 ITR 631 (SC)] has held that in order to qualify for exemption it is not enough that the land was once agricultural land, it must be agricultural land at the time of sale.
Source: AIFTP Journal June 23