‘hoy GroverAgricultural income [Section 10(1)] Section 10(1) provides that agricultural income is not to be included in the total income of the assessee. The reason for totally exempting agricultural income from the scope of central income-tax is that under the Constitution, the Central Government has no power to levy a tax on agricultural income.Agricultural income may arise in any one of the following three ways (1) It may be rent or revenue derived from land situated in India and used for agricultural purposes. (2) It may be income derived from such land (a) through agriculture or (b) the performance of a process ordinarily employed by a cultivator or receiver of rent in kind to render the produce fit to be taken to the market or (c) through the sale of such agricultural produce in the market. (3) Lastly, agricultural income may be derived from any farm building required for agricultural operations. Aohay GroverAgricultural income 1. Income derived from the sale of seeds. 2. Income from growing of flowers and creepers. 3. Rent received from land used for grazing of cattle required for agricultural activities. 4. Income from growing of bamboo.Non-agricultural income 1. Income from breeding of livestock. 2. Income from poultry farming. 3. Income from fisheries. 4. Income from dairy farming.Problem Solving Ankur, the owner of a land situated in Kerala used for growing thereon different types of fruits, paddy, vegetables and flowers, received from Yahoo Movies Ltd., Chennai, ‘5 lakhs as rent towards the use of this land for shooting of a film. The amount so received was accounted by him in the books as revenue derived from land and claimed to be exempt under section 10(1). He now wants to confirm from you whether the amount has been correctly treated by him as agricultura | income.The Income Tax has prescribed rules to make this bifurcation regarding agricultural and non-agricultural produce for products like tea, coffee, rubber, etc Operation Agricultural Income —_|Non-Agricultural income Growing and Manufacturing Tea 60% 40% Manufacturing Rubber 65% 35% [Growing and curing Coffee 75% 25% Coffee grown, cured, roasted, and [grounded with or without mixing chicory or| 60% 40% other flavouring ingredients ‘hoy GroverPartial integration of agricultural income with non- agricultural income A method has been laid down to levy tax on agricultural income in an indirect way. This concept is known as partial integration of agricultural income with non-agricultural income. It is applicable to individuals, HUf, AOP, BOI and artificial persons. Two conditions which need to be satisfied for partial integration are: 1. The net agricultural income should exceed 2 5,000 p.a., and 2. Non-agricultural income should exceed the maximum amount not chargeable to tax. (i.e., ¥ 5,00,000 for resident very senior citizens, X 3,00,000 for resident senior citizens,% 2,50,000 for all other individuals and HUFs). Aohay GroverTax calculation in such cases is as follows: Step 1: Add non-agricultural income with net agricultural income. Compute tax on the aggregate amount. Step 2: Add net agricultural income and the maximum exemption limit available to the assessee (i.e., = 2,50,000 / % 3,00,000/ % 5,00,000). Compute tax on the aggregate amount. Step 3: Deduct the amount of income tax calculated in step 2 from the income tax calculated in step 1 i.e., Step 1— Step 2. Aohay Grover* Step 4: The sum so arrived at shall be increased by a surcharge, if applicable. It would be reduced by the rebate if any available u/s 87A. * Step 5: Education cess @4% Abhay GroverProblem Solving Compute the tax liability of Mr. Amar for the assessment year 2022-23 (i) Agricultural income 1,20,000 (ii) Non-Agricultural income (computed) 4,50,000 Abhay GroverProblem Solving Compute the tax liability for assessment year 2023-24 in each of the following cases : (a) Mr. A's total income from all other sources is 2,44,000 and Net Agricultural income is1,00,000; (b) Mr. D's total income from all sources is 4,86,000 and Net Agricultural income is 10,000; (c) A.H.U.F. has total income of 5,14,000 and Net Agricultural income is 50,000. Aohay GroverProblem Solving Compute the tax liability for the assessment year 2023-24 in following cases Case A Mr. Joseph Case B Mrs. MaryCase C Mr. John Agricultural income 46,000 30,360, 60,360, Non agricultural income 3,26,560 5,60,300 4,60,000 Mr. John is 70 years old. Abhay GroverMr. X, a resident, has provided the following particulars of his income for the PY. 2017-18. 4 Income from salary (computed) - %1,80,000 iL Income from house property (computed) - %200,000 iii Agricultural income from a land in Jaipur - %280,000 iv. Expenses incurred for earning agricultural income - %1,70,000 Compute his tax liability assuming his age is - (@) 45 years (0) 70yearsQ. No. 7 State with reasons whether the agricultural income is considered for income tax purposes in. following cases of an individual for the Assessment year 2018-19 and compute tax li necessary. Net Agricultural Net Non-Agricultural Income Income z z 2,50,000 NIL 4,500 3,10,000 1,00,000 1,88,000 3,20,000