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Will milk sale be taxable if it is not main product??

Tax queries 8648 views 1 replies

rahul tusnial

partner

40 Points Joined June 2010

A QUESTION OF LAW........ need good responses...:-

Hi.

Have leased out some 5 acres agricultural land for vermicomposting.

Have also reared cows for the purpose of COW-DUNG and COW-URINE to be used as raw material in vermicomposting and production of bio-pesticide. This is the main purpose. Turnover of Vermicompost and biopesticides sales = Rs.65,00,000/-.

But naturally we also get milk, which we sell as it is locally in the village. So, we can say that rearing of these cows is NOT MAINLY for milk or dairying. So we call it a by-product or co-product. Turnover of milk sales = Rs.15,00,000/-.

We also get some bio-gas in the process of vermicomposting which we also sell. This is also a co-product. Turnover of biogas sales = Rs.4,50,000/-.

We wish to ask if the milk sale, (since the purpose of rearing the cattle is not dairying but something else), will be exempt from income tax? Could you also give reference to certain case laws to support?? Will truly appreciate. Thanks.

Replies (1)

Z

Tax Consultation (US and India)

2970 Points Joined September 2011

According to sec 2(1)(A) income from dairy farming is not considered as aggriculture income , milking is dairy farming activity.

Rent will be treated as aggriculture income.

The main purpose of rearing cows is production of biopesticides and biogas , which attracts sec 80JJA

Accrodingly, any profit or gains derived from the business of collecting and processing or any profits and gains derived from the business of collecting and processing or treating of bio-degradable waste for generating power [or producing bio-fertilizers, bio-pesticides or other biological agents or for producing bio-gas or] making pellets or briquettes for fuel or organic manure, there shall be allowed, in computing the total income of the assessee, [a deduction of an amount equal to the whole of such profits and gains for a period of five consecutive assessment years beginning with the assessment year relevant to the previous year in which such business commences