Explanation:

In the above statements, while statement I states a condition, statement II discusses the consequence of what is stated in statement I. This straightaway eliminates options A and C as in these two options the given conditional phrase is actually linking to the consequence part whereas it should link the condition part.
Possibility:
Assuming that the land the land belonging to your father does not satisfy the exclusion criteria stated in the definition of capital asset, the gain arising from the sale of the agricultural land by your father would be taxable.
Clearly, the above synthesis is both grammatically and contextually correct and keeps the flow intact.
Assuming that (Conjunction):
used for the purpose of argument to indicate a premise on which a statement can be based.
Ex. Assuming that the treaty is ratified, what is its relevance?
Option C is hence the correct answer.