Statement I: In India, income from allied agricultural activities like poultry farming and wool rearing in…
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?
Both Statement I and Statement II are correct and Statement II explains Statement I
Both Statement I and Statement II are correct but Statement II does not explain Statement I
Statement I is correct but Statement II is not correct
Statement I is not correct but Statement II is correct
Solution
Income from poultry, wool rearing, dairy etc. are taxable allied agricultural activities, not exempt. Hence Statement I is incorrect. Under Section 2(14) of the Income-tax Act, rural agricultural land is excluded from the definition of capital asset. Statement II correct.