Page 20 - DCOM508_CORPORATE_TAX_PLANNING

Unit 1: Income Tax: Basic Framework

2. That ‘Land’ should be used for agricultural purpose. Notes

3. The said ‘land’ should be existing in India.
1. Income should be received from land: Income received in the form of cash or agricultural
produce from the lease holder to the land lord is treated as ‘agricultural income’. If the
leaseholder gives the land to sub-lease, such income is also tread as ‘agricultural income’.
Income received in the form of rent or income received by the sale of agricultural products
is also treated as ‘agricultural income’.

Example: 10 bags of paddy sold @ ` 500/- per bag.
Hence, ‘Income’ received is treated as agricultural income. Income, which has indirect source of
land, is not treated as ‘agricultural income’.

Example: Divided received by the shareholder of the agro-based company.
2. Land should be used for agricultural purpose: Agricultural works can be categorised in to
two types:
(a) Primary works or elementary works
(b) Ancillary works

3. Land must be situated in India: Income received from agricultural land situated in countries
other than India, can not be treated as agricultural income.

Notes
The following incomes CANNOT be treated as ‘Agricultural Income’:
1. Income received from sale of ‘Bricks’.

2. Income from sale of pots.
3. Income received from sea-food like fi sh etc.
4. Income earned from boat or ship transportation.
5. Income earned from supply of water into agricultural land.
6. Income received from excavation or depletion of rocks.

7. Income received from godown or warehouse to store agricultural output.
8. Income earned by way of selling agricultural land or compensation received from
government for acquiring such land.
9. Royalty received from mines.

10. Income earned from poultry and dairy forms.
11. Interest or principal amount received on loan given for agriculture.
12. Commission on sales made by lease-holder which is collected by landlord.
13. Rent received on land for marketing the agricultural products.

14. Annual income earned on transfer of agricultural property to another person.

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