Page 21 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes 1.5.1 Certain income which is treated as Agricultural Income

Following are the certain incomes which are treated as agricultural income:

(a) Income from sale of replanted trees.
(b) Rent received for agricultural land.

(c) Income from growing flowers and creepers.

(d) Share of profit of a partner from a firm engaged in agricultural operations.
(e) Interest on capital received by a partner from a firm engaged in agricultural operations.

(f) Income derived from sale of seeds.

1.5.2 Certain income which is not treated as Agricultural Income

Following are the certain incomes which are not treated as agricultural income:
(a) Income from poultry farming.
(b) Income from bee hiving.
(c) Income from sale of spontaneously grown trees.

(d) Income from dairy farming.
(e) Purchase of standing crop.
(f) Dividend paid by a company out of its agriculture income.
(g) Income of salt produced by flooding the land with sea water.

(h) Royalty income from mines.
(i) Income from butter and cheese making.
(j) Receipts from TV serial shooting in farm house are not agriculture income.

Did u know? If a person just sells processed produce without actually carrying out any
agricultural or processing operations, the income would not be regarded as agricultural
income. Likewise, in cases where the produce is subjected to substantial processing that
changes the very character of the product (for instance, canning of fruits), the entire
operations cannot be regarded as agricultural operations. The profit from the sale of

such processed products would have to be apportioned between agricultural income and
business considered agricultural income since there is no active involvement in operations
like cultivation and soil treatment.

1.6 Income Tax Systems in India

The Indian Income Tax department is governed by the Central Board for Direct Taxes (CBDT)
and is part of the Department of Revenue under the Ministry of Finance.
The government of India imposes an income tax on taxable income of individuals, Hindu

Undivided Families (HUFs), companies, firms, cooperatives societies and trusts (Identifi ed as

body of Individuals and Association of Persons) and any other artificial person. Levy of tax is
separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961.

16 LOVELY PROFESSIONAL UNIVERSITY