CIT (1954) 26 ITR 758 (SC) has decided that capital gains is also a species of income. From the above discussion, it follows that if the tree trunks are cut and sold with stumps intact with scope for re-generation, the receipt would be agricultural income. If not, it could be sale of capital asset.
What is the meaning of agriculture income?
Any income or revenue derived from sources like farming lands, buildings constructed on or identified with agricultural land, and the commercial produce received from agricultural land is known as agricultural income. Section 2(1A) of the Income Tax Act, 1961 lays down the definition of agricultural income.
Is sale of timber taxable in India?
The proceeds of sale of timber of the shade trees were of capital nature and not taxable as income.
How to report income from sale of timber?
There are two ways to report the income received from a timber sale, depending on how the income is derived: Capital Gains- Schedule D: You may receive income by cutting timber and opting to treat that cutting as a sale, or by disposing of standing timber, which is known as stumpage.
Can a tree be sold for agricultural income?
From the above discussion, it follows that if the tree trunks are cut and sold with stumps intact with scope for re-generation, the receipt would be agricultural income. If not, it could be sale of capital asset. But as yet, there is no direct decision from the Apex Court as to their liability for capital gains tax.
How much did I get from sale of trees?
QUESTION: During the current financial year, I have sold trees from my land, which is situated beyond municipal limits, for a total value of Rs.25 lakh. Part of the trees was grown without any aid. Besides these receipts, I have income from business, which is subject to audit under section 44AB.
How is the sale of timber reported on schedule D?
Capital Gains- Schedule D: You may receive income by cutting timber and opting to treat that cutting as a sale, or by disposing of standing timber, which is known as stumpage. In this case the income is treated as a Capital Gain and is reported by the taxpayer on their Schedule D.
