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Consider the following statements

,

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?

(a)

Both Statement I and Statement II are correct and Statement II explains Statement I

(b)

Both Statement I and Statement II are correct but Statement II does not explain Statement I

(c)

Statement I is correct but Statement II is not correct

(d)

Statement I is not correct but Statement II is correct

Answer:

(b)

Explanation

•Statement I: Under the Income-tax Act, 1961, income from allied agricultural activities like poultry farming and wool rearing in rural areas is exempt under Section 10(1) if it qualifies as agricultural income. This is correct. • Statement II: Rural agricultural land is not considered a capital asset under Section 2(14) of the Income-tax Act, 1961, so capital gains tax does not apply. This is correct. • Explanation Check: Statement II deals with the classification of land, while Statement I deals with income exemption. They address different tax provisions and are unrelated, so II does not explain I.