Agriculture income

Refer Rule 7 of Income Tax rules:

Agriculture Income:

Market value of produce - cost of cultivation = 10 lacs - 6 lacs = 4 lacs - This is agriculture income, hence exempt

Business Income :

[Sales] - cost of manufacturing - MD salary  = [25 lacs - 10 lacs] - 6 lacs - 3 lacs = 6 lacs - This is Business income.

Notes:

1. Out of sales reciepts of Sugar, Mkt value of Sugar cane is deducted so as to arrive at the non-agriculture income

2. MD salary is deducted wholly from business income as R.7 says that after deducting the Mkt. value of agriculture produce, not other exp. relating to cultivation shall be deducted. Hence, MD salary is wholly charged to Business income.

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- Ashish

(8802999731)