|Question And Answer|
|Subject:||COA for Urban Agri. Land or NA Land (Converted from Urban Agri. Land) as on 01-04-2001|
|Answered by:||Advocate Shashi Ashok Bekal|
|Tags:||Agricultural Income, Agricultural land, capital asset, Capital Gains, valuation|
|Date:||September 20, 2021|
Ancestral Urban Agri. Land had been converted into NA Land in FY 2017-18 and ultimately sold in FY 2021-22.
For the purpose of computing capital gains, while determining COA as on 01-04-2001, whose FMV is to be taken – i.e. applicable to Urban Agri. Land or NA Land?
Also whether is it possible to take COA as on the date the Urban Agri. Land was converted to NA Land?
Section 55 and the head of capital gains refers to the transfer of a capital asset. A rural agricultural land is not a capital asset under the scheme of Income-tax Act, 1961.
Therefore, FMV of NA on the date of conversion may be taken into consideration, also the period of holding will be considered from the date of conversion.
However, an urban agricultural lnd qualifies to be a capital asset and will attract Capital gains. Therefore, Fair Market Value as on April 01, 2001 has to be taken as The cost of acquisition.
It would be advisable to get the value determined by a valuation report.