Question And Answer
Querist: Karan shah
Answered by:
Date: August 27, 2022
Query asked by Karan shah

Assessee had land in dholera. Dholera has population of 2500 peoples. There is no town within 20 kms from dholera (land of assessee) having a having population more than 10000.

The government has recently recognized dholera as residential zone and passed town planning.

Q – whether the land of assessee will be considered as agriculture land as population of dholera is less than 10000 and whether sale of said land will be taxable?

Q – Or whether due to the status of land being residential zone and under town planning, the sale of given land will be taxable

Q – Many income tax assessment order has been passed of assessee living in dholera making capital gain on sale of such land as taxable on the ground that – the area is now under town planning and residential zone. What ground can be taken against the given order?

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There is a twin condition to be satisfied for a land to not be recognized as a capital asset i.e., 1. It has to be agricultural land. 2. It has to be situated in a rural area.

Now, As the conditions for not treating land as rural agricultural land under section 2(14)(iii) of the Income-tax Act are not fulfilled, the same will continue to be treated as rural agriculture land, which is not a capital asset and thereby no capital gains can be attracted on the transfer of the said land.

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