• Buying agriculture land in name of company

Hi Sir
My friends and I are planning to buy agriculture land. We have two options
1)  register in individual's name ....Issue here is land has a borewell in two places and only some part facing the road, so there is no real way of splitting the land into four equal parts.
2) Start a company (LLP) as equal shareholders and buy this land so we dont have issue in registration.

Question:  What are the pros and cons in each of these options?

Thanks
Bhuvanesh,
Asked 2 years ago in Business Law from Bangalore, Karnataka
1. For the purpose buying a property i DO NOT FIND ANY NED TO FORM llp.
2. If both of you wish to commercially exploit the land by means of agricultural yielding or by any other means then forming of partnership firm with equal share of profit and loss.
3. You can either buy the property in your joint names and then form the firm to use the land or buy the property in the name of rim after forming the partnership form.
Devajyoti Barman
Advocate, Kolkata
5149 Answers
54 Consultations
4.9 on 5.0
1) in some states  like Karnataka  agricultural land can only be bought by agricullturist . 

2) if you are an agirculturist then only you can buy agricultural land . further you income should not exceed Rs 2 lakhs in a year  

3) Karnatka Land Revenue Act debars non-agriculturists from purchasing farm land, Section 109 says certain land can be exempted from the provisions of the act for the purposes of industry and horticulture, and for educational institutions, places of worship and housing projects.

Any company wanting to buy farm land has to go through the high-power committee before approaching the cabinet.
Ajay Sethi
Advocate, Mumbai
23107 Answers
1213 Consultations
5.0 on 5.0
1. First of all both of you shall have to be agriculturists and your family income should be less than Rs.2 lakhs per year to be eligible to buy agricultural land in Karnataka,

2. If you satisfy the above conditions and are eligble to but agricultural land in Karnataka, then you can buy in joint name without complicating the matter,

3. The land purchased in joint names will give equal share of the property to both of you.
Krishna Kishore Ganguly
Advocate, Kolkata
12042 Answers
227 Consultations
5.0 on 5.0
1) you never mentioned when you raised your query that you were buying agricultural land in tamil nadu . since you are from karnataka we advised you on said basis . further you have not mentioned how much land you are planning to buy 

2)In Tamil Nadu, there is no restriction for Purchase of any Agricultural land. Anyone can Purchase an Agricultural land.  The provision of Land Reforms Act states that a family with five members can maximum own 15 standard acres of agricultural land. Additional five acres is allowed for every member of the family, but all put together the maximum a family can own cannot exceed 30 standard acres. 

3) it appears 4 persons are together buying agricultural land . however since only part of land is facing road and it would not be possible to divide land then it would be not a worthwhile proposition 
 
4) Any private company looking to purchase large acres of agriculture land in the state of Tamil Nadu, 
must take permission from the state government under section 37(A) of the Tamil Nadu Land 
Reforms Act, 1961 before going ahead with the purchase.
Any such land acquired by a company cannot be transferred by the way of sale, mortgage, gift, or 
lease without the prior consent of the state government.
Purchase of agriculture land is subject to some rules such as “special government permission must 
be obtained to purchase wet lands or dry lands benefited from irrigation projects”.

5)if you so desire you can form company or LLP as case may be . in LLP liability of partners is limited
Ajay Sethi
Advocate, Mumbai
23107 Answers
1213 Consultations
5.0 on 5.0
n India, An LLP is treated like any other partnership firm.
No partner would be liable on account of the independent or unauthorized actions of other partners & there is no joint liability created by other partners.
LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession.
Indian Partnership Act, 1932 shall not be applicable to LLPs and there shall not be any upper limit on number of partners in an LLP unlike an ordinary partnership firm where the maximum number of partners can not exceed 20.LLP model is much more tax advantageous compared to a private company
Ajay Sethi
Advocate, Mumbai
23107 Answers
1213 Consultations
5.0 on 5.0
1. In the instant case, if the area of the land to be purchased falls within the limit prescribed in the Land Reforms Act,  buying the same  in joint name is sugested,

2. For the purpose of your buying the land, LLP or partnership firm will hardly make any difference, since the land will be owned by the firm, be it partnership firm or LLP.
Krishna Kishore Ganguly
Advocate, Kolkata
12042 Answers
227 Consultations
5.0 on 5.0

Ask a Lawyer

Get legal answers from top-rated lawyers in 1 hour. It's quick, easy, and anonymous!
Ask a Lawyer

Business Lawyers

T Kalaiselvan
Advocate, Vellore
13915 Answers
127 Consultations
5.0 on 5.0
Ajay Sethi
Advocate, Mumbai
23107 Answers
1213 Consultations
5.0 on 5.0
Ashish Davessar
Advocate, Jaipur
18057 Answers
445 Consultations
5.0 on 5.0
Krishna Kishore Ganguly
Advocate, Kolkata
12042 Answers
227 Consultations
5.0 on 5.0
Devajyoti Barman
Advocate, Kolkata
5149 Answers
54 Consultations
4.9 on 5.0
Nadeem Qureshi
Advocate, New Delhi
3517 Answers
129 Consultations
4.9 on 5.0
Rajgopalan Sripathi
Advocate, Hyderabad
869 Answers
43 Consultations
5.0 on 5.0
Shivendra Pratap Singh
Advocate, Lucknow
2729 Answers
41 Consultations
4.9 on 5.0
Lakshmi Kanth
Advocate, Hyderabad
223 Answers
2 Consultations
4.8 on 5.0
Shashidhar S. Sastry
Advocate, Bangalore
1232 Answers
59 Consultations
5.0 on 5.0