Page 93 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes The process to make it marketable has been performed either by the cultivator or
receiver of rent-in-kind.

The produce must not change its original character.

Example: Where a farmer grew mulberry leaves and fed the same to silk-worm, it was
not a process employed by the cultivator of mulberry leaves to make them marketable by way
of producing silk cocoons, and the income derived from rearing of silk-worms was not agricultural
income because the silk cocoons produced by silk-worms did not bear any character of an
agricultural produce or as a marketable form of mulberry leaves.

4. Income from sale of produce: When the cultivator or receiver of rent-in-kind sells the
produce either after performing certain activities to make it fit for market or without
doing any such activity, the income is agricultural income. It is immaterial that he has sold
the produce to the wholesaler in the market or through his own retail shop directly to the
consumers.
5. Income from building: In the following cases the income from building or house property
is treated as agricultural income:

If the landlord receives rent in cash, it is owned and occupied by him; or if the
landlord receives rent-in-kind, it is occupied by him – whether owned or not; or if it
is occupied by the cultivator – whether owned by him or not;

If it is on or in the immediate vicinity of the agricultural land;
If it is required as a dwelling-house or as a store house or as an out-house by the
landlord or cultivator;

If it is required by reason of the landlords or cultivators connection with the land,
i.e., either the building is required to make the produce fit to be taken to the market
or there is a sufficient quantity of produce which requires a store house or there are
numerous tenants and it is necessary to stay there to collect the rent or it is necessary
for the cultivator to be there to look after the farm.
The land is assessed to land revenue in India; or the land is subject to land revenue
or local rate assessed and collected by the officers of the Government – either Central
or State for the benefit of local bodies. Where the land is not so assessed, the building
should not be situated:
in an area of municipality (whether known as Municipal Corporation, Notified
Area Committee, Town Area Committee, or by any other name or Cantonment
Board) whose population according to the latest census figures published is
10,000 or more; or

in a notified area within such limits of a Municipality, etc., as may be notified
by Government.
However, the distance of notified area cannot exceed 8 kilometres from the local limits. The
department has issued various circulars from time to time specifying the notified areas.

Notes Certain income which is not treated as Agricultural Income includes:
1. Income from poultry farming.
2. Income from bee hiving.
Contd...

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