Village Land, Earnest Money, and Income Tax

 What a seller should know before filing ITR

Ramesh owned agricultural land in a village, outside the Nagarparishad limits. After holding it for more than 25 years, he agreed to sell it and received earnest money from the buyer. He then asked the most practical question: should this amount be shown in the Income Tax Return? For rural agricultural land, the answer is usually no, because such land is not treated as a capital asset under section 2(14) of the Income Tax Act.

The important point is that the legal character of the land matters more than the label in the agreement. If the land is genuinely rural agricultural land and the documents support that position, the sale generally falls outside capital gains tax, and the advance received under the agreement is not taxable merely because it was received.

Ramesh’s Story

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When court can set aside arbitration award as per S 34 of Arbitration Act?

On perusal of the judgment relied upon by the learned
counsel for the respondents in Associate Builders vs. Delhi
Development Authority (supra), it is clear that the Court can set-aside
the award if the award is against justice or morality, discloses patent
illegality, contrary to the terms of the contract and not in accordance
with the substantive law of India. In my view, the petitioners have
made out a case that the award is patently illegal on the face of
record and the learned arbitrator has decided contrary to the terms of
the tender documents and has also decided contrary to the law laid
down by the Supreme Court and this Court and thus this Court has
ample power to set-aside such award under section 34 of the said
Act.
 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.240 OF 2013
Maharashtra State Electricity
Distribution Company Limited,

V
Vijai Electricals Limited

 CORAM : R.D. DHANUKA, J.

 PRONOUNCED ON : 4TH FEBRUARY, 2015
Citation:2016 (5) ALLMR74

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