PRINCIPLES OF TAXATION

 INCOME
 AGRICULTURE INCOME
AGRICULTURAL INCOME
The definition of ‘agricultural income’ under section 2(1A) provides
that the following shall constitute agricultural income:

 any rent or revenue derived from land which is situated in India

and is used for agricultural purposes [Section 2(1A)(a)]
 any income derived from such land by agricultural operation
including processing and sale of the agricultural produce as rent-in-
kind so as to render it fit for the market [Section 2(1A)(b)],
 income derived from building or land used for agricultural
operation, in certain cases. [Section 2(1A)(c)]
Agricultural Income

Land should be situated in India

Income should derived from the land
Land must be used for agriculture purpose
TYPES OF AGRICULTURAL
INCOME
1. Ant Income Received as rent or revenue from agricultural
income.
 The rent or revenue considered agricultural only when
a) It is derived from land
b)The land is situated in India
c)The land is used for agricultural purposes.
CIT v. Raja Benoy Kumar Sahas Roy
(1957) 32 ITR 466 (SC)
 Some basic operations prior to the germination
are essential to constitute agriculture like tilling
land, watering it , planting and it should done
by the assesses
 subsequent operations such as weeding,
cutting , harvesting and rendering the produce
fit for marketing alone would not constitute
agriculture
 Whether agriculture activity carried out
by company is exempt:
Section 10(1) speaks about exemption of agricultural income
irrespective to the constituent of the person be it individual,
HUF, Company, trust etc hence profit from agricultural
activity carried out by company is also exempt from tax.
C. I. T. V. KAMAKSHYA NARAIN
SINGH
 Income other than rent and that is why mutation fees
received from the tenants on their getting occupancy
holdings and fees paid by the tenants at the time of
renewal of their lease, are revenue derived from land and
as such exempted from tax.
BACHA F.GUZDAR v. C.I.T,AIR
740(1955)
 The dividend received by a member of a company doing the agricultural
operation is not agricultural income in the hands of that member.
so any income or revenue indirectly derived from land cannot be
presumed to be Agricultural Income.
Rent or revenue derived from the land.
The land must be an immediate and effective source of rent or revenue and
not merely a secondary or indirect source.
The dividend received by a member of
accompany doing agriculture operation
is not agriculture in come in the hands of
that member
C.I.T v. All In.dia Tea& Trading Co.

 Income received- BY leasing out his coffee estate-considered as

agricultural Income.
 Events not deemed to be agricultural income.
 Income received from the lease of coconut trees for enjoyment.
 Dividend Income received by the assessee shareholder. Land cannot
be taken as the direct source of the dividend.
 Maganlal Morarbhai v.C.I.T(1980)
Agricultural income required to derive from agricultural land

2. Income derived from agriculture.

3. Any income accruing to the person by the performance of any process to
render the product marketable.
4. Any income received by the person by the sale of produce revised or received
as rent in kind.
6. Income derived from the building.
THANK YOU