The land is sold out in the F/Y 2011-12 where the agricultural activities were carried on. This land is situated in the Baloda Bazar district of Chhattisgarh and this land falls within 8 kms from the municipality of Baloda Bazar. However considering the definition of capital asset and Notification No.9947 dated 06/01/1994, this land falls in the Raipur district of C.G. and is far away from the 8 kms from the municipal limit of Raipur.
Kindly tell whether it is a capital asset or not? And we can save capital gain or not?
As per Section 2(14) of Income Tax Act, agriculture land is not a capital asset, hence no capital gain tax at the time of sale of agriculture land.
But if such land is situated in any area within the distance, measured aerially not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh, it will be come under scope of capital asset.
As you have mentioned above that this land falls in the Raipur district of C.G. and is far away from the 8 kms from the municipal limit of Raipur. Therefore it is not a capital asset and capital gain will also not arise as well.