Consider the following statements :
Statement I: In India, income from allied agricultural activities like pou

Question

Consider the following statements :
Statement I: In India, income from allied agricultural activities like poultry farming and wool rearing in rural areas is exempted from any tax.
Statement II: In India, rural agricultural land is not considered a capital asset under the provisions of the Income-tax Act, 1961.
Which one of the following is correct in respect of the above statements?

Accepted Answer

Statement I: Incorrect. Income from allied agricultural activities like poultry farming and wool rearing in rural areas is NOT completely exempt from tax. While agricultural income from land is exempt under Section 10(1), allied activities like poultry and dairy farming may be subject to taxation depending on the scale and nature of operations.

Statement II: Correct. Under the Income Tax Act, 1961, rural agricultural land is indeed not considered a capital asset, and therefore gains from its sale are not subject to capital gains tax. This exemption applies specifically to agricultural land in rural areas.

The exemption for agricultural land reflects the policy to support agricultural activities, but allied agricultural activities may have different tax treatment based on their commercial nature.

Answer

Both Statement I and Statement II are correct and Statement II explains Statement I

Answer

Both Statement I and Statement II are correct but Statement II does not explain Statement I

Answer

Statement I is correct but Statement II is not correct

Answer

Statement I is not correct but Statement II is correct

Explanation

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