Question

Determine partially and min partially agricultural income

Answer 1

Explanation:

Sometimes, income comprises of both agricultural as well as non-agricultural income. Such a situation arises in case of certain ‘Agro based industries where agricultural produce is used as raw material and it (i.e., raw material) is produced by the same person (i.e., industrialist) who manufactures industrial product by using such raw material. Such industries (i.e., persons), earn income by selling the industrial product manufactured from self grown agricultural raw material.

For example :

For example :Mr. X is the owner of agricultural land in India and produces sugarcane by spending Rs. 2,00,000. Further, X set up an industrial undertaking to manufacture sugar from sugarcane so produced. Accordingly, he uses the whole quantity of sugarcane for producing sugar and spends Rs, 2,50,000 as industrial expenses. He ultimately sells the sugar so produced for Rs. 7,00,000.

For example :Mr. X is the owner of agricultural land in India and produces sugarcane by spending Rs. 2,00,000. Further, X set up an industrial undertaking to manufacture sugar from sugarcane so produced. Accordingly, he uses the whole quantity of sugarcane for producing sugar and spends Rs, 2,50,000 as industrial expenses. He ultimately sells the sugar so produced for Rs. 7,00,000.In this case, the total income of Mr. X shall be calculated as follows :

For example :Mr. X is the owner of agricultural land in India and produces sugarcane by spending Rs. 2,00,000. Further, X set up an industrial undertaking to manufacture sugar from sugarcane so produced. Accordingly, he uses the whole quantity of sugarcane for producing sugar and spends Rs, 2,50,000 as industrial expenses. He ultimately sells the sugar so produced for Rs. 7,00,000.In this case, the total income of Mr. X shall be calculated as follows :Total Income = Sale proceeds of sugar - Cost of cultivation - Industrial expenses

For example :Mr. X is the owner of agricultural land in India and produces sugarcane by spending Rs. 2,00,000. Further, X set up an industrial undertaking to manufacture sugar from sugarcane so produced. Accordingly, he uses the whole quantity of sugarcane for producing sugar and spends Rs, 2,50,000 as industrial expenses. He ultimately sells the sugar so produced for Rs. 7,00,000.In this case, the total income of Mr. X shall be calculated as follows :Total Income = Sale proceeds of sugar - Cost of cultivation - Industrial expenses= Rs. (7,00,000 - 2,00,000 - 2,50,000) = Rs. 2,50,000

For example :Mr. X is the owner of agricultural land in India and produces sugarcane by spending Rs. 2,00,000. Further, X set up an industrial undertaking to manufacture sugar from sugarcane so produced. Accordingly, he uses the whole quantity of sugarcane for producing sugar and spends Rs, 2,50,000 as industrial expenses. He ultimately sells the sugar so produced for Rs. 7,00,000.In this case, the total income of Mr. X shall be calculated as follows :Total Income = Sale proceeds of sugar - Cost of cultivation - Industrial expenses= Rs. (7,00,000 - 2,00,000 - 2,50,000) = Rs. 2,50,000The above total income of Mr. X is the composite income comprising of agricultural income and non-agricultural income. The income attributable to agricultural operations (i.e., raising of sugarcane) is agricultural income and the income attributable to industrial operations (i.e., manufacturing sugar from sugarcane) is non-agricultural income.

Answer 2

Answer -

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• An assessee may have composite business income which is partially agricultural and partially non-agricultural, for example, where XYZ Ltd. grows potatoes and further processes its produce to sell them as wafers. In this case the company has composite income i.e. from agriculture and from business

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