SALE OF RURAL AGRICULTURAL LAND

[Guest]

Assessee is a retail spare parts dealer with annual turnover of ₹ 15 Lakhs

Assessee sold a rural agricultural land for ₹ 10 lakhs. he invested the amount in a residential house property valuing ₹ 20 Lakhs. He got 10 Lakhs from his savings and some amount from his wife too.

As sale of rural agricultural land is not a capital asset at all, there is no need to calculate capital gain.

My questions are:

1) Should we show the proceeds of sale of rural agricultural land in the income tax return under exempted income?

2) the invested new house property to be showed in the balance sheet of assessee?

3) If so, we should increase the capital amount in BS to show corresponding building in assets side?

Thanks in advance

[DR.MARIAPPAN GOVINDARAJAN]

1. It may be shown in the income tax return

2. It may be shown as assets.

3. In my view it can be added as capital. However views of experts are solicited.

AI Summary

Rural agricultural land characterization: guidance suggests reporting proceeds and recording reinvested residential property in accounts. Whether proceeds from the sale of rural agricultural land must be treated as a capital receipt and how the proceeds and reinvestment should be reflected in the assessee's accounts: the sale proceeds may be shown in the income tax return, the acquired residential property may be recorded as an asset in the balance sheet, and the investment can be reflected by increasing the capital account, subject to further expert views.