Agriculture income or other income

This query is : Resolved

Hetvi (Querist)
Follow

09 April 2015 Respected Sir,
I have some agriculture land and use for agriculture purpose and generate agriculture income which is exempt from tax.

now,
MY QUERY START
I want to hire (on rent basis )agriculture land and use for agriculture purpose and generate some income after deduction of rent exp.of hiring of agriculture land

IS THIS INCOME IS AGRICULTURE INCOME??

himanshu

himanshu (Expert)
Follow

09 April 2015 Since you have taken land on rent.
you will be needed to reduce Rent out of revenue.
That's why you will be assessed as business income and not Agricultural income .

Nikhil Kaushik

Nikhil Kaushik (Expert)
Follow

09 April 2015 beg to disagree here. There is no such condition that ownership should rest with the farmer. It is the income from that the agriculture land that is exempt - not the ownership.

If your view is agreed to, then all the landless farmers will have to brought under the income-tax net!

As long the assessee is able establish that he performed agricultural activities on a land that is covered within the definition of agricultural land (as defined by Income-tax act), any income earned therefrom shall be exempt from taxation.

You may refer Commissioner of Income-tax v. Yegappa Nadar', 50 Mad 923 where the court held that "..... the same income was earned by the owner or the lessee of the land on which the trees grew, it would be agricultural income..."

Upgrade to CAclubindia Pro. Subscribe Now!