UPSC CSE Prelims
Question 79
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?
View correct answer and explanation
Correct answer: D
Correct Option: D (Statement I is not correct but Statement II is correct)
Explanation: Poultry breeding and wool rearing are allied activities but do not automatically qualify for the Income-tax Act's exemption for 'agricultural income'. Rural agricultural land outside specified urban limits is generally excluded from the definition of a capital asset.
Statement / Pair / Item-wise Analysis:
I: False-such allied incomes can be taxable as business or other income.
II: True-qualifying rural agricultural land is not a capital asset under section 2(14).
Option-wise Analysis:
A. Incorrect-this does not reflect the actual truth values or explanation relationship of the statements.
B. Incorrect-this does not reflect the actual truth values or explanation relationship of the statements.
C. Incorrect-this contradicts the specific facts evaluated in the analysis above.
D. Correct-this matches the facts and the item-wise assessment above.