20 different Activities: Whether Agricultural income or not?
Agricultural income is exempt from tax. Often the question arises whether activities related to agricultural activities is also an agricultural activities or not?
There are various income which appears to be in the nature of agricultural income like dairy farming, fisheries, etc but they are not so.
Here is a shortest possible compilation for the benefits of the taxpayers.
1. In Sri Ranga Vilas Ginning & Oil Mills v CIT (1982) 133 ITR 85 (Mad), ncome from supplying surplus water to other agriculturists is held to be not an agricultural income.
2. Income from growing of mushroom has been held to be an agricultural activity and so entire profit therefrom is exempt from tax.
3. Income from breeding of livestock, poultry farming, brick making, Royalty income of mines, Dog breeding center, etc is not an agricultural income.
4. Income from fisheries has been held in CIT v V.T.S. Sevaga Pandia Thever (1933) 1 ITR 78 (Mad) has been held to be not an agricultural income.
5. Harvest Crop on purchased land is held to be not an agricultural income – CAgIT v New Ambadi Estates Ltd. (1967) 63 ITR 325 (SC).
6.Compensation/damages paid for loss of agricultural income due to late payment of instalments of the consideration price of rubber plantation site is held to be not an agricultural income in Malabar Industrial Co. Ltd. v CIT (2000) 243 ITR 831 (SC)
7. Income derived from letting out of land/godowns for storing crop is held to be not an agricultural income
8. Preservation of potatoes by refrigeration as it is not a process ordinarily employed by a cultivator & so it is not an agricultural income.
9. Income from salt produced by flooding the land with sea water and then extracting salt therefrom is not an agricultural income as held in Linga Reddi v CIT 2 ITC 363 (Mad).
10.Interest on arrears of rent in respect of agricultural land is not an agricultural income and hence it will be taxable as regular income.
11. In Shivlal Ganga Ram, In re AIR 1927 All 703, it has been held that income from stone quarries is not an agricultural income.
12. Income from sale of forests, trees, wild grass, fruit and flowers grown spontaneously and without human effort is not an agricultural income. This is so held in the case of ustafa Ali Khan v CIT (1948) 16 ITR 330 (PC) & also in Maharajadhiraj Sri Kameshwar Singh (1957) 32 ITR 587 (SC)
13. Registration fee collected from the contractor who is bidding at the auction conducted for sale of plantation is not an agricultural income as such registration fee had no nexus with land& so held to be not an agricultural income in CIT v Tamil Nadu Forest Plantation Corporation Ltd. (2000) 162 CTR 525 (Mad).
14. Annuity payable to vendor of agriculture land or payable to a person giving up his claims to piece of agricultural land is held to be not an agricultural income – Maharaja Bikram Kishore of Tripura v Province of Assam (1949) 17 ITR 220
15. Income derived by the assessee, a State Government undertaking engaged in cultivation of sugarcane, from the sale of tender forms is held to be not an agricultural income in State Farming Corporation v CIT (1990) 181 ITR 271 (Ker).
16. Trees which do not have a spontaneous growth and cannot be regenerated in near future to give some benefit to assessee and which are being cut in a prescribed manner and thereafter sold to particular person at a fixed price & involving no profit element in the transaction, such income earned shall be treated as capital receipt and not revenue receipt. Accordingly, it will not be chargeable to tax as held in CIT v Mahendra Karma Pooranchand Soni (2014) 42 taxmann.com 380 (Chhattisgarh), (2014) 221 Taxman 172 (Chhattisgarh) (Mag).
17. Hire charges received for use of the garden for shooting films could not be treated as agricultural income, as it has no nexus with the land, except that it was carried out on the agricultural land. So, it is held to be not an agricultural income in B. Nagi Reddi v CIT (2002) 258 ITR 719 (Mad)
18. Income of nursery [Explanation 3 to section 2(1A)]:
Any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income. So, irrespective of the fact as to whether the basic operations have been carried out on land, such income will always be treated as agricultural income & so will be eligible for exemption under section 10(1) of the Act.
19. In CIT v Maddi Venkatasubbaya (1951) 20 ITR 151 (Mad), it is held that profit on sale of standing crops/agricultural produce purchased by the assessee is not an agricultural income.
20. Income from plantains like nilgiri, sagwan etc which are not grown naturally but are planted is an agricultural income.
It was very informative