Disallowance of expenses relating to agri income

No.. not acceptable.. Rs. 50000 should be added to agriculture income only

Yes, Mr. Dhiraj is right, but in order to get back the claim, the assesse have to maintain the seperate accounts for business income and agricultural income,

The stand taken by AO is not acceptable. File an appeal before the CIT (A). Also file a rectification application u/s. 154 before AO.

Also  Refer Rule 7

The AO is wrong bec Sec14A says the expense incurred wrto agri income  shall not be allowed in computing the taxable business income....... Since here the assesee has not considered Rs.50000 it has to be added with the Agri income and not business income..........

Thanks a lot friends...

CLAIM OF AO IS ACCEPTABLE. Only expenses that are attributable for getting agricultural income is allowed to be deducted from agricultural income so derived.

EXPENSES NOT ATTRIBUTABLE FOR PROCURING AGRICULTURAL INCOME HAS TO BE ADDED BACK TO BUSINESS INCOME IF HE HAS NO OTHER INCOME EXCEPT BUSINESS AND AGRICULTURAL. IF HE HAD SPENT FOR ANY EXPENSE, IT MAY BE EITHER FOR HIS PERSONAL PURPOSE, BUSINESS PURPOSE OR AGRICULTURAL PURPOSE. IT HAS TO SEEN THAT WHERE FROM THE MONEY HAS BEEN SPENT. IS THE PAYMENT IS MADE FROM BUSINESS OR OUT OF HIS PERSONAL SOURCES?

IF IT IS FROM PERSONAL HIS PERSONAL ACCOUNT- AO's DECISION IS WRONG

IF IT IS FROM BUSINESS CURRENT ACCOUNT- NATURE OF EXPENSE TO BE VERIFIED WHETHER IT IS FOR PROCURING BUSINESS INCOME OR AGRICULTURAL INCOME. IF EXPENSE IF FOR PROCURING BUSINESS INCOME, WHAT AO DID IS RIGHT. IF THE EXPENSE IS FOR AGRICULTURAL PURPOSE, AO'S DECISION IS WRONG.

THE KEY FACTOR HERE IS

1. WHERE FROM THE MONEY HAS BEEN SPENT?

2. WHETHER THE AMOUNT SO DISALLOWED IS FULLY ATTRIBUTABLE FOR PROCURING AGRICULTURAL INCOME?