2

AGRICULTURAL INCOME

AGRICULTURAL INCOME [Sec. 2(1A)]

The meaning of the term agricultural income can be explained with the help ofthe following chart :
Agricultural Income
t
A B C
(i) Any rent or revenue derived (i) Any income derived from such land by Any income from a farm
from land, (ii) which is situated agricultural operations or (ii) any process house.
in India and (iii) is used for by .cultivator or receiver of rent-in-kind,
agricultur~ purposes. which renders the produce fit for the
market or (iii) the sale of such produce.
Note : yapital Gains arising from the transfer of urban agricultural land shall not k j ; ~ agricultural income.
If tlie following conditions are
satisfied the inco~from land is treated as agri~ tural ·
income:
1. The land must be situated in India. If the land is situated outside India, the income
from such land will not be treated as agricultural income.
2. Land must be used for agricultural purposes. It means, tilling of the land; watering it,
sowing of the seeds, planting and similar operations on the land must be carried out
by the assessee.
3. The receiver of income from the land must have an interest in the land. ,The landlord
or tenant or usufructuary mortgagee of the land has an interest in the land.
If a person purchases a standing crop and !lfte:r:_cuttiI!g it, sells it an,d makes a profit,
s31ch profit is not agricultural income. ·- ·---------
4. The.direct income from agriculture is treated as agricultural income. An indirect
income from agriculture is not agricultural income. For examp/,e, the salary of a farm
manager or dividend from a company engaged in agricultural activities is not agricultural
income.
KINDS OF AGRICULTURAL INCOME
(1) Rent or revenue derived from land : When one person grants to another a right to use
his land for agricultural purposes, the former receives from the latter rent or revenue (in cash
or kind) in consideration of such use. Such rent or :revenue is treated as agricultural income.
(2) Income from agricultural operations : An income is agricultural when some agricultural
operations are perfomed. Agricultural operations means cultivation of a field, tilling of the land,
watering it, sowing of the seeds, planting and similar operations on the land.
Products which grow wild on the land or are of spontaneous growth not involving any
human labour or skill upon the land are not products of agriculture. The income derived
therefrom is not agricultural income.
(3) Income from making the produce fit for market: If there is no market of the produce of
the field and the cultivator or receiver of rent-in-kind performs any activity to make the produce
 20 INCOME TAX
.
fi. t for .market, any income from such activity is also agncultur al •0 come The process employed
! h process.
ID cunng of coftie fl · of tob · · g of cotton et.c., 1s sue
e, ue cunng acco, gumm '. cultivator or receiver of
~4) ~ncome from the ,ale of produtt: lnc~e den~~ by a asa 'cultural income,
rent-1D-kind from the sale of produce raised or received by him is treated gn
even ifhe keeps a shop for the sale of such produce. d gn'cult l
. (5) Income from a farmhou,e : The income from a farmhouse is treate as a ura
1Dcome if the following conditions are satisfied :
(i) the building is owned and occupied by the cultivator or receiver of the rent or revenue
of any such land; . l d·
(ii) it is situated on or in the immediate vicinity of the agncultural an d 11' h
(iii) the building is, by reason of his connection with the la1,1d, used as~ ~:J?g ouse or
a store-house or an out-house by the cultivator or receiver of rent-m- ' . di
(iv) the land is situated in an urban area and is either assessed to land revenue ID 1n a
or is subject to a local tax assessed and collected by the officers of the government.
If the land revenue or local tax is not payable on such land :
(i) The land is situated in the 'non-urban' area; or . . . .
(ii) The land is situated within municipality or cantonment board Jurisdietion, has a
population of less than 10,000; or . .
(iii) The farm building is not situated within the area specified below, the mcome denved
from such building shall be agricultural income :
The land is not situated in any area within the distance, measured aerially :
' (a) not being more than two kilometres from the local limits and which has a population of
more than ten thousand but not exceeding one lakh; or
(b) not being more than six kilometres from the local limits and which has a population of
more than one lakh but not exceeding ten lakh; or
(c) not being more than eight kilometres from the local limits and which has a population
of more than ten lakh.
(6) Income from saplings or seedling, : The income derived from saplings or seedlin.gs grown
in a nursery shall be deemed to be agricultural income.
,t._ IMPORTANT POINTS REGARDING COMPUTATION OF AGRICULTURAL INCOME
~ l(l) Agricultural Income by way of rent or revenue derived from land which is situated in
India and is used for agricultural purpose is computed as ifit were income chargeable to income
tax under the head 'Income from .Other Sources'.
(2) Agricultural Income from agricultural building is computed as if it were income
chargeable to income tax under the head 'Income from House Property'.
(3) Any other agricultural income is computed as if it were income chargeable to income tax
under the head 'Profits and Gains of Business or Profession'.
Note : If payment exceeding l' 10,000 has been made under (1) or (3) without account payee cheque or account payee
bank draft or use of electronic clearing system through a bank account, even than the whole amount shall be
allowed as a deduction.
(4) Any sum payable by the assessee on account of any tax levied by the State Government
on the agricultural income shall be deducted in computing the agricultural income.
(5) Where in respect of any source of agricultural income there is a loss, such loss shall be
set-off against any other source of agricultural income.
. (6) Where the assessee is a member of an Association of Persons or Body of Individuals and
his share in the agricultural income of the association or body is a loss, such loss shall not be
set-off against any other agricultural income of the assessee.
(7) ff there is loss from agriculture, it can be carried forward and set-off against agricultural
income in the following eight years provided the return of income has been filed and such loss
has been determined by the Assessing Officer. .
-------- - - - --AGRICULTURAL
- - -INCOME- - - - - - - - - - -~21
(8) Where the ne~ ~eeult of the cottJputation made i.n acrordant-e with theae '?lee is a loss,
the Joee eo computed ts ignored and the net egtlcultttrel income is deemed to be tnl.
(9) The net agricultural income is rounded-off to the neatest multiple of rupees ten.
NON-AGRICULTURAL INCOMES FROM LANO
The fol~owing in~omes are not derived from land used for agricultural pu:rpoeee, hence they
are non-agricultural incomes :
(i) Income from markets;
(ii) Income from stone quarries;
(iii) Income from mining royalties;
(iv) Income from land used for storing agricultural produce;
(v) Income from_ t~e s~pply of water for irrigation purposes (e.g., income from the supply
of water for irrigation from a tube-well or well as it does not involve any agricultural
operation); '
(vi) Income from self-grown grass, trees or bamboos;
(vii) Income from fisheries;
(viii) Income fro1!1 the s~e of tqe earth for brick-making;
(ix) ~~uneration received as manager of an agricultural farm;
(x) Dividend from a company engaged in agriculture;
(xi) Income of the buyer of a ripe crop;
(xii) Income from dairy farming, poultry farming, etc.; and
(xiii) Income from interest on arrears of rent of agricultural land.
1 Illustration 1
State whether the following income from land situated in India is agricultural income or
not:
(i) Income from interest on arrears of rent payable in respect of land used for agricultural
purposes.
(ii) Income from the use ofland for grazing of cattle required for agricultural pursuits.
(iii) Income from lease ofland for grazing of cattle required for agricultural pursuits.
(iv) Income from the sale of forest trees of spontaneous growth on which some operations
for their preservation and grof{th were perfo~ed.
(v) Income from interest on a simple mortgage ofland used·for agricultural purposes.
(vi) Notional income from a house situated near the agricultural farm and owned and
occupied by the assessee for the supervision ·of the farm activities. The farm is situated in a
village 10 kilometres from the city. No land revenue or local tax is le~ed on this farm.
. (vii) Income from agricultural land situated in Pakistan.
(viii) Prize from the Government on account of higher yield.
(ix) Amount of compensation received from Insurance Company on account of the loss of
crop due to flood.
Solution
(i) It is not an agricultural income as it is not directly connected with land but with failure
to pay the rent on time. [CIT vs. Raja Bahadur Kamakhaya Narain Singh & Others (1948) 16 ITR 325 (PCD]
(ii) It is an agricultural income as it is an agricultural activity.
[CIT vs. R.B. Raja Shamsherjang Bahadur (24 ITR = AIR 1953 All. 676)]
(iii) It is an agricultural income. It is immaterial whether the assessee used the land for
grazing of cattle or gives it on lease for the purpose. IP. Chellaiah Pillai vs. CIT (16 ITR 350)]
(iv) It is not an agricultural income as basic operations of cultivation have not been
performed. !Maharaja of Kapurthala vs. CIT (13 ITR 74 = AIR 1945_Oudh 35)]
(v) It is not an agricultural income as it is not derived from the land but from the mortgagor.
[CIT vs. Shri Kameshwar Singh Maharaja of Darbhanga (2 ITR 107)]
(vi) The land is situated in a non-urban area. Hence, whether land revenue has been paid
or not on the land, the notional income of agricultural building is exempt.
22
INCOME TAX -
(v") A.....: • • ot an agricultural income
ntS~,cultural land ie not situated in India, hence income 18 n . ·
(vm) It 18 not an agricultural income due to the following reasons·
(a) The income ie not from the land· or .
(b) The income ie not from the use ~fland for agricultural purposes, or
(c) The income ie not from the sale of agricultural produce. f th
. (ix) It is an agn· ult al . Th
c ur income. e compensa on ti , received on account o
18 ITR
e loss of
agricultural income. [CIT vs. B. Gupta ('.Thal Put. Ltd. (1969) 74 337 (Cal.)]
• Illustration 2
St ate with reasons whether the following are agricultural income :
(i) Income from the sale of replanted trees where the denuded parts of the forest are
repl~ted and sub~equent op~rations in forestry are carried out. . .
(u) Income from the sale of trees of forest which are of spontaneous growth and m relation
to which forestry operations alone are performed.
Solution
(i) It is agricultural income as these trees are not ofspontaneous growth but have been replanted
and subsequent operations in forestry were carried out. (CIT vs. Raja Benoy.Kumar Saha, Roy)
(ii) It is not an agriculturai income as it is deri; ed from the sale of trees of spontaneous
growth. Here there are no basic operations like tilling of the soil, sowing and planting. The
subsequent operations for conservation and improvement of such trees do not constitute
agricultural activities. .
Illustration 3
From the following information compute net agricultural income for the Assessment Year
. f
Lease rent received from lands given to tenants for agricultural operations 48,000
Sale of agricultural produce (Landlord's share) · 30,Q00
Payment of government tax on agricultural lands 6,000
Expenses on power, irrigation, cess and farm labour 10,000
Purchase of seeds 1,000
Tractor hire charges (for agricultural operations) 2,500 .
Solution ·
Computation of Net Agricultural Income
(for the Assessment Year 2022-23) f
Lease rent 48;000
Sale of agricultural produce 30,000
78,000
Less : Expenses : f
(i) 'I'ax on agricultural lands 6,000 .
(ii) Power, irrigation, cess and farm labour 10,000
(iii) Seeds 1,000
(iv) Tractor hire charges 2,500 19,500
Net Agricultural Income 58,500
11/usfratlon 4
Compute net agricultural income from cultivation of land :
Sale proceeds of agricultural produce 2,00,000 "
Depreciation on equipment 10,000
Labour charges 25,000
Cost of seeds 10,000
Cost of fertilisers 5,000
Electricity charges on agriculture 15,000
---------------:..:=.:.:.:..::.:.::.:.::::.:.::..::=.::.::.::::...._
AGRICULTURAL INOOME _ _ __ _ _ _ _ _ __ 23
501utton Computation of Net A,rlealtanl lneome
(for the A•se11ment Year 2022-23)

Sale Proceeds of agricultural produce f

Less : Expenses : 2,00,000
Depreciation .
Labour charges 10,000
Cost of seeds 25,000
Cost offertilisers 10,000
5,000
Electricity charges
Net Agricultural
f!,000e
1 Illustration 5
From the followin~ infonnation compute Net Agricultural Income : f
(1) Income from Gram business (including the amount received f 38 000 from wheat
produced at own agricultural land) ' · 1 87 500
(2) Lease rent received from land given to tenants for agricultural operations '181000
(3) Sale of agricultural produce . 48'.ooo
(4) Payment of Govt. Land Revenue on Agricultural Land 6,000
(5) Expenses on power, irrigation and farm labour 10,600 ,
(6) Purchase of seeds, fertilisers and pesticides 7 500
(7) Tractor hire charges (for agricultural operations) 2'.500
Solution Computation of Net Agricultural Income
(for the Assessment Year 2022-23)

Sale of own crop f

38,000 ·
Lease rent
18,000
Sale of agricultural produce
48,000 1,04,000
Less : Expenses :
Land revenue
6,000
Power, irrigation and farm labour
10,600
Seeds, fertilisers and pesticides 7,500
Tractor hire charges
2,500 26,600
Net Agricultural Income 77,400
• Illustration 6
From the following information compute net agricultural income of Ram :
Rent derived from agricultural land f 20,000; Sale of agricultural produce f 40,000, Rent
of a store house f 4,000, Rent received of dwelling house used by the farmer f 10,000.
Deductwn claimed. Depreciation on plant and machinery used on the farm f 6,000; expenses
on sale of agricultural produce f 400; Insurance Premium in respect of store house f 50;
Collection charges of rent of store house f 300; House-tax paid of dwelling house f 1,000; Repair
charges of store house and dwelling house f 200 and f 500 respectively. Cost of seeds used f 500;
other expenses on cultivation f 1,000. Tax paid to the State Government on agricultural land let
outf 2,000.
Solution Computation of Net Agricultural Income
(for the Assessment Year 2022-23)
1. Income from dwelling house used by the farmer :
(computed as Income from House Property)
G. A. V. (Rent) 10,000
Less : House tax paid .1,000
Annual Value 9,000
Less : 30% of A. V. 2,700 6,300
 --
24

2
· lncorne from agricultural produce :
INCOME TAX

.
(computed as Business income) Selling pnce
Less: Depreciation
'f
6,000 •
400
40,000
-
Selling expenses 500
Cost of seeds 1 000
3 Oth~r expenses . . e) 32,l0Q
. Income from Store house (computed as BUBmess mcom ·
Rent o 4,000
Less : Insurance premium 300
5
Colle~ion charges ZOO 550
Repairs - )• 3,450
4. Rent
Rent of agricultural land (computed as income from other sources · 2o,000
Less : Tax to State Govt. 2,000
Net Agricultural Inco~e
PARTLY AGRICULTURAL INCOME AND
PARTLY NON-AGRICULTURAL INCOME
Sometimes there is composite income which is partially agricultural and partially non-
agricultural. For determining the non-agri~ultural income chargeable to t~, the market ~~ue
of any agricultural produce which has been raised by the assessee and wh!ch has been utiliz:<I
as a raw material in such business shall be deducted. No further deduction shall be made m
respect of the cost of cultivation incurred by the assessee as a cultivator.
For this purpose, market value shall be deemed to be :
(a) where the agricultural produce is ordinarily sold in the market, the value calculated
according to the average price at which it has been so sold, during the relevant previous
year;or
(b) where the agricultural produce is not ordinarily sold in the market the aggregate of
I I the following shall be its market value :
i' {i) the expenses of cultivation;
{ii) the land revenue or rent paid for the land on which it was grown; and
{iii) the profit which in the opinion_of the Assessing Officer is.reasonable.
Examples ·
(1) Profit• of such Sugar Factories which produce sugar from sugarcane grown on their
own farms are treated as partly agricultural income. Sugarcane is generally sold in the market.
Hence, in order to separate the agricultural income from the business income, the average
market price of sugarcane during the relevant previous year shall be charged as an expenditure
and no note will be taken of the expenses of cultivating the sugarcane. The income thus
determined will be the business income. ·
(2) lneome from growing and manufacturing of 'lea : Sixty per cent of the income derived from
the sale of tea grown and manufactured by the seller in India is deemed to be agricultural income and
the remaining forty per cent is taken as business income.
(3) Income from growing and manufacturing of centrifuged latex or cenex : Sixty five per
cent of the income derived from the sale of centrifuged latex or cenex manufactured or processed
by him from rubber grown by him in India is deemed to be agricultural income and the remaining
thirty-five per cent is taken as business income.
(4) Income from growing and manufacturing of Coffee :
(a) Seventy-five per cent of the income derived from the sale of coffee grown and cured by
the seller in India is deemed to be agricultural income and twenty-five per cent is taken
as business income.
(b) Sixty per cent of the in~me ~eriv~d from ~he sale ?f_coffee grown, cured, roasted and
grounded by the seller m India, with or without nuxmg of chicory or other flavouring
 AGRICULTURAL it«:OME 25
ingredients are deemed to be agriculturaJ income and the remaining forty per cent is
taken as business income.
111u,tratlon 7
• Mr. 'Tony had estates in Rubber, Tea and Coffee. He derives income from them. He ha11 also
a nursery wherein he grows plants and sells. For the Previous Year ending 31.3.2022, he
furnishes the following particulars of hie sources of income from estates and sale of plants : t
(i) Manufacture of Rubber 5,00,000
(ii) Manufacture of Coffee grown and cured 3,50,000
(iii) Manufacture of Tea 7,00,000
(iv) Sale of Plants from Nursery 1,00,000
You are requested to compute the taxable income for the Aseessment Year 2022-23.
$OIUtfon
Computation of Taxable Income
(for the Assessment Yeat 2022-23)
(i) Manufacture of rubber 35% of income is treated as businese income
(ii) Manufacture of coffee grown and cured 25% of income is treated as
"
1,75,000
business income 87,500
(iii) Manufacture of tea 40% of income is treated as business income 2,80,000
(iv) Sale of plants from nursery is exempt (being agricultural income)
However, agricultural income will be added in total income
for computation of tax
Taxable Income 5,42,500
• Illustration 8
ASugar factory crushed 41,000 quintals of sugarcane during the previous year out of which
6 000 quintal of sugarcane was produced on its own farm at a cost off 13,20,000. The rP.maioing
s~garcane was purchased from the market at the following rates : "
20,000 quintal@ f 279 per quintal
5,000 quintal @f 282 per quintal
10,000 quintal@ f 288 per quintal
During the previous year, the factory earned a total profit off 5,00,000. You.are required
to compute separately the agricultural and non-agricultural income. ·
Solution
Cost of Sugarcane purchased from the market : Cost
f
20,000 quintal@ f 279 per quintal . 55,80,000
. /
5,000 quintal@ f 282 per quintal . 14,10,000
10,000 quintal@ f 288 per quintal 28,80,000
98,70,009
Average Market Pnee. = f 98, ,70,000 =.., 282
35 000
Market value of sugarcane produced on own farm : f
(6,000 X 282) 16,92,000
Less : Cost of sugarcane grown on own farm 13,20,000
Agricultural Income 3,72,000
Total Profit 5,00,000
Less: Agricultural Income 3,72,000 ·
Non-Agricultural Income 1,28,000 ,
,..
Hence, Agricultural Income 3,72,000
and Non-Agricultural Income 1,28,000
 26 1NCOMETAX

• lllulfratlon 9 . ·cultural raw m~terial which

. A factory manufactures certain goods which reqwre sue~ agn hich the following expenses
18 n~t ayailable in the market. Hence, the factory itself grows it on w

are mcurred : . Irrigation expenses f 1,800;

Ploug~g expenses " 2,800; Manure f 3,200; Seed f l,OOO, •cultural expenses f 1,400.
W~s of agricultural labour" 4,000; Ground rent f 1,200; Other S:ble amount of profit on the
Besldes the above expenses, the Assessing Officer assessed a re= ction of the above expenses
~hove work to be" 6,000. If the profit of the factory before the u
18 f 80,000. Compute Agricultural Income and Business Income.

Solution ·
. · . ket value will be computed
Smee the raw material is not available in the market, its mar ?
as under : 2 800
Ploughing expenses 3'200
Cost of manure 1'000
1~
Irrigation charges 4 000
Wages of Agricultural labour 1'200
Ground rent '
Other Agricultural expenses 1,400
Reasonable profit assessed by the Assessing Officer ·
Market value of Raw Maten
'al 6•0
21 400
°°
Profit earned by the factory during the year 80,000
Less : Estimated market value of the raw material raised on own land 21,400
Business Income 58,600
f
Market value of agricultural produce 21,400
Less : Cost of agricultural produce (21,400 - 6,000) 15,400
Agricultural Income 6,000
Agricultural Income and Tax Llablllty or Integration of Agricultural Income and Non-
agricultural Income for Income Tax Purposes
Agricultural income is totally exempt froIQ liability to income tax. However, agricultural
income is a factor in determining the tax on the non-agricultural income of an Individual, Hindu
Undivided Family, Association ofPersons and Body oflndividuals whose total income (excluding
agricultural income) exceeds the minimum taxable limit and the net agricultural income exceeds
f 5,000.

Chart Showing Computation of Income Tax of an Individual

<Assessee has Agricultural Income)
Total Income
Add : Agricultural Income
Aggregate Income ...........
=
Tax on Aggregate Income :
(A) Tax on income liable to tax at special rate :
(a) Casual income@ 30%
(b) Tax on STCG u/s lllA@ 15%
(c) Tax on LTCG@20%/10%
(B) Tax on balance of income
[Aggregate income - Income in (A) at normal rates]
 AGAICULTUFW. l«XJME 27
Less : Tax on Agricultural income (Net Agricultural income+
t 2,50;000/3,00,000/6,00,000 at n.ormal rates)
Less : ~bate u/s 87A
Add : Surcharge, if any

Add : Health and Education Ceas@ 4%

Tax Liability
Less : (i) Tax deducted at Source
(ii) Tax .Paid in advance
Net Tax Payable or Refundable
Rounded oft .......... .
1 lltu,tration 10
Compute tax liability of Mr. X who has an agricultural income off 80,000 and non-agricul-
tural income off 8,00,000.
_,,._,.~
"'1JU'""'·I .

Computation of Tu Liability
(for the Assessment Year 2022-23)
f
Non-agricultural Income
8,00,000 ·
Agricultural Income
80,000
on
Tax f 2,50,000
. Aggregate Income 8,80,000-
Nil:
· Tax on Next f 2,50,000@ 5%.
12,500
Tax on Balance f 3,80,000 @20%
76,000'
88,500 .
Less : Tax on f 2,50,900 + 80,._000 = f 3,30,000 4,000
84,500
Add : Health and Education Cess @4% 3,380
Tax Liability, 87,880.
1 IIIUllratlon 11 r
X, a resident in India, aged 63 years, earned an agricultural income off.30,000 during the
Previous Year 2021-22. Compute his tax liability assuming that he has non-agricultural income
off 3,20,000.
Solution
Computation of Tu LiabiUty of Senior Citizen
(for the Assessment Year 2022-23) , f
Non-agriculatural Income 3,20,000
Add : Agricultural Income 30,000
Aggregate Income , 3,50,000
Tax on f 3,50,000 :
On f 3,00,000 Nil
Next f 50,000@ 5% 2,.500
2,500
Less : Tax on f 3,00,000 + 30,000 = 3,30,000
On f 3,00,000 Nil
Next f 30,000@ 5% 1,500 1,500
1,000
LeBS : Rebate u/s 87A 1,000
Tax Liability Nil
 INCOME TAX

• lllullroflon 12 - 'cultural income is f 20,000

The income of an individual from business is f 6,20,000 and agn
for the Previous Year 2021'-22. Compute tax liability.
Solutton
Computation of Tu Liability
(for th£ AsseBBment Year 2022-23) ?
(A) Non-agricultural Income 6,20,000
Agricultural Income 20,000
.Aggregate Income
Tax on ? 6,40,000 : ·\
on ? 2,50,000 ~ '<.. >~ Nil
on f 2,50,000 @ 5% 1 '\ 12,500
on f 1,40,00~ sj"- 28,000
(a) 40,500
(B) Less : Tax on agricultural income : ·--=
Tax on exempted limit + Agricultural income
f 2,50,000 + 20,000 = f 2,70,000 (b) 1,0QQ
(C) Tax on Total income (a- b)
Add : Health and Education Cess @ 4% 1,580
1/lustratton 13 Tax Liability 41,080
----=
In the following cases compute tax liability of an individual resident in India for the
Assessment Year 2022-23 :
(a) Total Income f 1,80,000, Agricultural Income f 50,000
(b) Total Income f 4,30,000, Agricultural Income f t4,000
(c) Total Income f 11,00,000, Agricultural Income f 15,000
Unabsorbed Agricultural Loss f 5,000 brought forward from the Assessment Year 2021-22.
Solution
Computation of Tax Liability
· (for the Assessment Year 2022-23)
(a) No in~me tax is payable as the total income does not exceed f 2,50,000
(b) Total Income f
Add : Agricultural Income (It does not exceed f 5,000) 4,30,000
Nil
Income tax on Total Income Total Income 4,30,000
Less: Rebate u/s 87A (Total income does not exceed f 5,00,000) 9,000
9,000
_ (c) Total Income Tax Liability Nil
Agricultural lncoine f 11,00,000
LeSB : ];3rought forward Agricultural LoBS 15,000
Net Agricultural Income 5,000
10,000
. . Income tax on aggregate Income Aggregate Income 11,10,000
f•\
Less : Income tax on Agricultural Income increased by 1,45,500
f 2,50,000, i.e., (10,000 + 2,50,000) or f 2,60,000
JO 1-'>
Income tax on 'lbtal Income (f 11,00,000) ,.,500
Add : Health and Education Cess @4% / 1,45,000
5,800
Tax Liability 1,50,800
 29
• 111u1tratlon 14
From the particulars given below compute the tu liability at Mr. Abba, (a aerlior citizen,
3ge 66 years) for the Assessment Year 2022-23: f
(a) Income from self-cultivated land (groas proceed,) 50,000
(b) Rent from 10 hectare of land given to tenant, (per hectare per annum) 3,000
(c) Annual rental value of the houses given to above mentioned tenants 6,000 p.a.
His expenses are :
(I) Own cultivated land :
(i) Depreciation to equipments
(ii) Land revenue paid to State Govt.
2,000p.a.
(iii} Purchase of seeds and fertilizers
1,200p.a.
(iv) Labour charges 6,000p.a.
(II) Land given to tenants : 2,400p.a.
(i) Land revenue
(ii) Other expenses 1,200 p.a.
(III) House Property : Repairs 2,000 p.a.
1,200p.a.
His business profit for the year is
10,30,600
Solution
Computation of Net Agricultural Income
(for the Assessment ~ar 2022-23)
Computed as Income from House Property :
Rent from farmers (AV.) f f
Less : 30% of AV. 6,000
Computed as Income from Business : 1,800 4,200
Income from self-cultivated land
Less : Expenses : 50,000
f
Depreciation 2,000
Land revenue 1,200
Seeds and fertilizers 6,000
Labour charges 2,400
Computed as Income from Other Sources : 38,400
Rent from tenants
30,000
Less : Expenses : Land revenue 1,200 I

Other expenses 2,000 3,200

Net Agricultural Income
Computation ofTax Liability
(for the Assessment ~ar 2022-23) n,·
f
Non-agricultural income (Business income being T.I.) 10,30,600
Agricultural income · 69,400
Aggregate Income· 11,00,000
Tax on f 11,00,000 f
on f 3,00,000 Nii
on f 2,00,000 @5% 10,000
on f 5,00,000@ 20% 1,00,000
on f 1,00,000 @30% 30,000 1,40,000
1,40,000
Less : Tax on f 3,00,000 + 69,400 = f 3,69,400 3,470
1,36,530
Add : Health and Education Cesa @ 4% 5,461
Tax Liability 1,41,991
Rounded off f 1,41,990.