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?

Statement I: Incorrect. Income from allied activities like poultry farming, dairy, wool rearing, etc. is not treated as agricultural income under the Income-tax Act; hence it is not automatically exempt from tax.

Statement II: Correct. Rural agricultural land in India is excluded from the definition of 'capital asset' under the Income-tax Act, 1961, so transfer of such land does not attract capital gains tax.

Option check: Since Statement I is false and Statement II is true, the correct answer is (d).