Income from Agriculture

Income that is partially agricultural and partially non-agricultural [Rules 7, 7A, 7B and 8]

For disintegrating a composite business income which is partly agricultural and partly non-agricultural, the following rules are applicable –

Income	Non   agricultural       income	Agricultural    income		Income-   tax Rules
Growing and manufacture tea in India	40%	60%		Rule 8
Sale of centrifuged latex or cenex or latex based crepes (such as pale latex crepe) or brown crepes (such as estate brown crepe) or technically specified block rubbers manufactured or processed from field latex or coagulum obtained from rubber plants grown by the seller in India	35%	65%		Rule 7A
Sale of coffee grown and cured by seller	25%	75%		Rule 7B(1)
Sale of coffee, cured, roasted and grounded by seller in India with or without chicory or other Flavoring ingredients	40%	60%		Rule 7B (1A)
Income in respect of the business given above is, in first instance, computed under the Act as if it were derived from business after making permissible deduction.  40 or 35 or 25 per cent of the income so arrived at is treated as business income and the balance is treated as agricultural income. Salary and interest received by a partner from a firm (growing leaves and manufacturing tea or any other activity mentioned in the table) is taxable only to the extent of 40 or 35 or 25 per cent and the balance is treated as agricultural income.
In case of any other composite income which is partially agricultural and partially non-agricultural, the market value of agricultural produce, raised or received by assessee as rent in kind and utilized as raw material in his business is deducted. No further deduction is permissible in respect of any expenditure incurred by assessee as cultivator or receiver of rent in kind. Salaries and travelling expenses of general staff, general charges, provident fund for agricultural staff, legal expenses, postage and registration fee are, However, admissible as deduction in their entirety while computing the total income- See CITv. Bhopal Sugar Industries Ltd. [1970] 78 ITR 209 (MP).			Rule 7