The agricultural land of a farmer was acquired by the Govt. The farmer has been paid the compensation and has been alloted an alternative residential plot.
The question no.1- Whether the amount of compensation is taxable or will be treated as agricultural income.
Question no.2- Whether the farmer can sell this alternative plot, if yes whether the profit earned out of this sale will be taxable or will be treated as agricultural income.
Asked on 6/26/11, 12:47 pm
1 Answer from Attorneys
KarVai Legal Solutions
Rajiv Gupta 9811284735 Ch.No: 359, Western Wing, Tis Hazari, Delhi www.karvai.in
( 1)if you was continuing the agricultural activities on the land when it was acquired the amount of compensation was agricultural income and not taxable .
2. yes the farmer can sell this plot .and it wuld be taxable till the extent of the profit earned as it wuld be considered as capital gain .
Answered on 6/27/11, 11:31 pm
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