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Agriculture income

Rohan Mainkar (Manager) (60 Points)

18 January 2019

Suppose one of the LLP is doing verticle farming of Turmeric wherein they purchase seeds from farmers and grows the same and sells it into the market.

Will this income be treated as agriculture income?

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10 Replies

RAJA P M ("Do the Right Thing...!!!") (127053 Points)
Replied 18 January 2019

No.... It's purely business income.

Rohan Mainkar (Manager) (60 Points)
Replied 18 January 2019

Why Sir?

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 18 January 2019

to consider the income as agricultural income there are various conditions to be satisfied. the foremost thing is that the person earning agricultural income has to spend his own personal efforts to grow the crop. right from sowing seeds cultivation till harvesting the crop. this is as per the SC Ruling.
in your case yu are purchasing seeds from farmer and growing which is not an agricultural activity. so it is not agricultural income and will be taxable

Vedant Khanna (374 Points)
Replied 18 January 2019

Yes it should be agricultural income
exempt u/s 10(1)

Rohan Mainkar (Manager) (60 Points)
Replied 18 January 2019

Sir we do not purchase plant. we do all the operations right from the beginning till the end. In this case will it be consider Agriculture Income?

And other point is we do it in a vertical form wherein we do not cultivate land. We have poly house. (Photo attached)

what will be the tax implication?

Attached File : 2679965 20190118153014 poly house turmeric in vertical system 500x500.jpg downloaded: 124 times

shiv shankar rawat student CMA (Manager) (263 Points)
Replied 18 January 2019

my opinion is , it should be treated agricultural income

herbsandchilli Trading (81 Points)
Replied 18 January 2019

I saw your turmeric vertical growing set up in poly house. ( I think you are eiether using "soil"(technically earth "or coco fibre or mixture of both )

Only Hydro phonics growing (no soil -growing only in running water with nutrients (with or with out fish tank ) can be technically growing with out soil /earth.

Since this is a new field- there could be different interepretaion by auditio's /ITO's (assessing officers)

In my opinion - you are a farmer. you are growing turmeric from seed to finished product(root) .you are not a trader/ whole saler. all farmers buy seeds from some where . So Your income should be tax exempt.

By the way- where is this set up ? (Maharashtra -guess from your name !) if you are doing means - many people in the same belt must be doing right ? upload some more images . how many days crop ? pests? average realisation per Kg ? you are selling in nearest whole sale market or contract farming to some manufacturer ?

herbsandchilli Trading (81 Points)
Replied 18 January 2019

hydrophonics with out soil (earth) https://prntscr.com/m8v8np

Rohan Mainkar (Manager) (60 Points)
Replied 18 January 2019

It is in Nashik

Attached File : 2679965 20190118174056 img 20190118 wa0008.jpg downloaded: 108 times

herbsandchilli Trading (81 Points)
Replied 18 January 2019

OK. Nashik got it. Technically the entity is a coporate (LLP) farmer & not a trader / whole saler.

Though as an indivual you can claim this type of vertical farming (using coco peat/ soil /pebbles/saw dust etc -or mix of all ) can be considered "agriculture" (Not Aquaphonics /Hyderophonis using only water as a medium of growth ) - Iam not sure how the tax applies to you - as you are a patnership (LLP ) company (corporae entity) and not an indiviual farmer. !

You need to consult your Auditor who formed your LLP & filing annual returns,

Filing Tax return (on whatever basis ) is a must for LLP as you may distribute profits to your partners OR expand (buy more acerage ) by getting Bank loan etc . Easy to get further loans if you have audited balance sheet with ITR filings( even with exempt income- or zero tax basis )