Tax Treatment of Agricultural Income

Book Details

Chapter 1: Introduction
Evolution of Man and Agriculture	1
Third Tax Administration Reform Commission Report (2014)	2
Contribution of Agricultural Sector in GDP	2
Revolutions in Agriculture	3
Why agricultural income needs to be disclosed	4
Sections dealing with Agricultural income	4
Chapter 2: Background of Agricultural Income-tax
Agricultural income-tax in India	6
Present status of State’s Agricultural Income-tax Act	9
Bengal Agricultural Income-tax Act, 1944	11
Kerala Agricultural Income-tax Act, 1991	13
Chapter 3: Legal position of tax on agriculture
Taxes on agricultural income falls under Entry 46 in “State List� under the Constitution of India	14
Legislative position of agriculture and agricultural income	14
Legal framework	14
Agricultural Income & Its Tax Treatment	15
Why is it wrong in bringing agricultural income into the income-tax structure	15
Legislative History of exemption or taxability of Agricultural Income	16
Conditions must exist to attract this tax treatment	17
Chapter 4: Meaning of agricultural income
Land should be situtated in India	22
No matter if agriculture operation is carried on Urban Land	23
Incomes derived from land but they are not agricultural incomes because the requisite conditions not satisfied	23
Income from making the produce fit to be taken to market	24
Income from Nursery or Greenhouse	28
What constitutes agriculture	32
Chapter 5: Tests to determine agricultural income
What is agricultural Income	35
What constitutes agriculture	36
What records shall be maintained to prove agricultural income	38
How to Determine Agricultural Income	38
Chapter 6: Types of Agricultural Income
Two types of Agricultural Operations should be carried out on Land	48
Basic operations	48
Any income received by the person by the sale of produce raised or received as rent-in-kind	49
Income from sale of produce	49
Any income accruing to the person by the performance of any process to render the produce marketable	49
Basic operations including subsequent operations form one integrated activity	52
Chapter 7: Taxability of Income from Nursery growing and selling flowers, flowers plants	54
Chapter 8: Exceptions – Not Agricultural Income	60
Chapter 9: Capital Asset - Agricultural Land
What is agricultural land	81
Rural agricultural land in India i.e., agricultural land in India which is not situated in any specified area [Section 2(14)(iii)]	81
Rural Agricultural Land or Urban Agricultural Land	84
Chapter 10: Sale of Agricultural Land - Held not assessable as Capital Gains	106
Chapter 11: Sale of Agricultural Land – Held assessable as Capital Gains	112
Chapter 12: Exemption of Agricultural Income under Section 10(1)
Reasons for not taxing Agricultural Income	120
Who can claim exemption	121
Foreign agricultural Income is not exempted	122
Chapter 13: Exemption of Capital gains arising from the transfer of agricultural land
Background	130
What is Compulsory acquisition	131
Chapter 14: Capital Gain tax on sale of Urban Agricultural Land (non-rural area)
What is an Agricultural land	146
Tax on Sale of agricultural land	146
Types of Capital Assets	146
Who can claim exemption	147
Chapter 15: Exemption from Capital Gains from Transfer of Agricultural Land
Who can claim exemption	166
Chapter 16: Rules for computation of net agricultural income
Rules for computation of net agricultural income	189
Computation of net agriculture income	194
Chapter 17: Treatment of partly agricultural & partly non-agricultural income
Income from the manufacturing of centrifuged latex or cenex [Rule 7A]	208
Income from the coffee manufacturing [Rule 7B]	208
Income derived from sale of coffee grown, cured, roasted and grounded by the seller in India [Rule 7B(1A)]	208
Profit from TEA manufacturing [Rule 8]	209
Tax treatment of partly agricultural and partly non-agricultural	209
Excess income computed may be treated as ‘Undisclosed Income’ only where the assessee has any other source of income	211
Chapter 18: Income from growing & manufacturing rubber
Statutory background	213
Computation of income from sale of rubber grown in India [Rule 7A]	214
Chapter 19: Income from the manufacture of coffee
Statutory background	220
Computation of income from sale of coffee grown/cured/roasted/grounded in India [[Rule 7B(1) & (2)]	221
Computation of income from sale of coffee grown, cured, roasted and grounded in India [Rule 7B(1A) & (2)]	222
Chapter 20: Income from the manufacture of Tea
Income having direct nexus with tea business be apportioned as per rule-8	227
Chapter 21: Impact of agricultural Income on Tax computation
Taxation of Agricultural Income	231
Impact of agricultural income on tax computation	231
Conditions for including agricultural income in the toral income of the assessee	231
Chapter 22: Assessment relating to agricultural income
Legal framework	234
Objective of the Department	235
Verification of claims relating to agricultural income	235
Chapter 23: Deductible Agricultural Expenses
Cultivation Expenses	249
Insurance	250
Chapter 24: Agricultural Income – Addition made Held to be Justified	253
Chapter 25: Agricultural Income – Addition made Held to be Not Justified	256
Chapter 26: Treatment of Cash Sales of Agricultural Produce	268
Chapter 27: Treatment of Set-off & Carried forward of losses from Agricultural activity	277
Chapter 28: Applicability of Section 14A read with Rule 8D to Agricultural Income	281
Chapter 29: Adjustment from Book Profits in the Computation as provided in Section 115JB	283
Chapter 30: Cases where Revision of Order under Section 263 Held to be Justified	285
Chapter 31: Cases where revision of order under section 263 held to be not justified	288
Chapter 32: Cases where Reassessment was Held to be Justified	290
Chapter 33: Cases where Reassessment Held to be Not Justified	292
Chapter 34: Cases where Income held to be as Agricultural Income	295
Chapter 35: Cases where income held to be Non-Agricultural Income	306
Chapter 36: Cases where income shown as Agricultural Income held as income from Business	309
Chapter 37: Cases where income shown as agricultural income held as income from other sources	318
Chapter 38: Matter set aside to the Assessing Officer for verification	324
Chapter 39: Levy of Penalty	326
Chapter 40: Land & Revenue Records – Terms used in India	328
Chapter 41: Important Forms	331

About the Author

Ram Dutt Sharma

Ram Dutt Sharma was born on 27th June, 1958 in Narnaul, Haryana. He got his post-graduation from M.D. University, Rohtak in 1980. He joined the Income-tax Department in the year 1983 and retired as Income Tax Officer on 30.06.2018. He worked at various stations of North-West Region of Income-tax Department. He has wide experience of all wings of Income-tax Department such as Assessment Unit, Special Range, TDS Wing, Investigation Wing, etc. He has been Contributing articles and addressing on topics relating to Income Tax at NADT Regional Campus, Chandigarh & Bhopal. He has also addressed number of seminars organized by the Income-tax Department, Chartered Accountants, Advocates and various Trade Associations.

He is recipient of first-ever Finance Minister's Award 2017, the Income Tax Departments highest honour for sustained devotion, commitment to duty & promoting excellence in the field of Direct Taxation at National Level. The Hon'ble Union Finance Minister, Shri ArunJaitley conferred this Finance Ministers Award for Excellence for his meritorious services at VigyanBhawan, New Delhi on 24.07.2017.

Awarded by Hon'ble Member (Revenue& TPS), CBT, Special Secretary to the Government of India Certificate of Appreciation for his contribution recognized and included in the chapter Miscellaneous Orders in Let Us Share A compilation of Best Practices & Orders Vol. VIII released on 31stOctober, 2016.

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