AGRICULTURAL LAND

[manoj gupta]

Is it compulsory to use the land for agricultural operations for at least two years by the assessee before he can claim the benefit of exemption from capital gain on sale of agricultural land if all the other conditions are satisfied. this condition is to be fulfiled for claiming exemption u/s 54B. Is it also applicable to claim exemption for agricultural land not being a capital asset.

[CAGOPALJI AGRAWAL]

Yes, land must be used for agricutural purposes by the assessee or his parents for 2 years. For the purpose of section 2(14), actual operations at the relevat point of time (sale) is not so relevant if the land is agricultural and not used for any other purpose.

[DEV KUMAR KOTHARI]

When benefit of S.54B is considered the land must be held for two years as stipulated in S.54B itself. This provision is really relevant in relation to agricultural land which is a capital asset. In casse the land is rural agricultural land (not within specified limits of municipalties etc.)and it is not a capital asset as per exclusion provision then it will not be a capital asset, so any capital gains will not be taxable.

AI Summary

Clarification on claiming capital gains tax exemption for agricultural land under Section 54B: land use conditions explained. A query was raised regarding the conditions for claiming an exemption from capital gains tax on the sale of agricultural land under Section 54B of the Income Tax Act. It was questioned whether the land must be used for agricultural purposes for at least two years by the assessee. One response clarified that the land must indeed be used for agricultural purposes by the assessee or their parents for two years to claim the exemption. Another response highlighted that if the land is rural and not considered a capital asset, capital gains would not be taxable.