AGRICULTURAL INCOME, CAPITAL & REVENUE
(RECEIPTS, EXPENDITURE & LOSS)
AY: 2023 - 2024
PY: 2022- 2023
Module 2
Compiled by
[Link].S, [Link] Rai, [Link]
Gupta & [Link].T
1 For Private Circulation Only, JU-CMS Compiled
INCOME TAX –I PY 2022-2023, AY 2023-2024
AGRICULTURAL INCOME, CAPITAL & REVENUE (RECEIPTS, EXPENDITURE &
LOSS) -
PY: 2022-2023 & AY: 2023-2024
AGRICULTURAL INCOME
Agricultural income is fully exempted u/s 10(1).
Agricultural income includes:
[Link] rent or revenue derived from agricultural land situated in India
[Link] income from Cultivation of agricultural land , Income from Orchards or from
Horticulture
iii. A process carried on to make the produce or Rent-in-Kind marketable
from sale of produce
Income from agricultural house property situated in the vicinity of the agricultural land
and used for farmers own residence, tenant’s residence, cattle shed, go-down,
implements shed or outhouse. The land on which the house property is situated must be
subject to some tax levied by state or local government and must be situated.
PARTLY AGRICULTURAL AND PARTLY BUSINESS INCOME
Crop Rule Agricultural Business income
income
Growing and manufacture of tea
8 60% 40%
Rubber manufacturing business
7A 65% 35%
Coffee grown and cured by Seller
7B (1) 75% 25%
Coffee grounded by the seller in India 7B(1A) 60% 40%
with or without mixing chicory or
other flavoring ingredients
In case of other commercial crops: Average market price can be taken as agricultural
income and expenses on the same can be deducted
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INCOME TAX –I PY 2022-2023, AY 2023-2024
Problems on Agricultural Income
State whether the following incomes is agricultural income or not
1. Rent from agricultural land in Meghalaya
2. Plants sold in pots on the roof of the residential buildings
3. Income from gardening
4. Income from fisheries
5. Income from poultry farming
State whether the following incomes is agricultural income or not
1. The amount of compensation received from the insurance company on
account of the loss of crop due to flood
2. Income from interest on of rent payable in respect of land used for agricultural
purpose
3. Income from the use of land for grazing of cattle required for agricultural
purpose
4. Income from sale of forest trees of spontaneous growth on which some
operation for their preservation and growth were performed
5. Income from interest on the simple mortgage of land used for agricultural
purpose
6. Notional income from a house situated near the agricultural farm and owned
and occupied by the assessee for the supervision of the farm activities
7. Income from agricultural land situated in Afghanistan
8. Prize from the government on account of higher yield
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INCOME TAX –I PY 2022-2023, AY 2023-2024
3. State whether the following incomes is agricultural income or not
a. Dividend by a Tea company
b. Salary received by a Farm Manager
c. Income derived from land used as Stone Quarries.
d. Income from Processing of Green tea leaf
e. Rent from house- property situated in a village.
f. Capital Gain on sale of Urban Agricultural Land.
g. Income from Cultivation and export of flowers
h. Compensation received for acquisition of agricultural land for military
purposes.
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INCOME TAX –I PY 2022-2023, AY 2023-2024
4. Mr. Hemanth had an estate in rubber, tea, coffee. He derives the following income.
He also has a nursery wherein he grows plans and sells that. The following are the
information furnishes by him for the previous year 22-23.
Manufacture of rubber Rs.5,00,000
Coffee was grown and cured Rs.3,50,000
Manufacture of tea Rs.7,00,000
Sale of plant from nursery Rs.1,00,000
Compute taxable agricultural income for the assessment year 2023-2024.
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INCOME TAX –I PY 2022-2023, AY 2023-2024
5. Hatsun agro Foods Limited manufactures and sell tea. The raw materials of tea
leaves is grown in their own agricultural land and profit from tea business is
Rs.3,00,000 for the Previous Year 2022-2023. How much is the agricultural
income.
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INCOME TAX –I PY 2022-2023, AY 2023-2024
6. Zee Cafe Limited produces and sells 5,00,000 worth coffee which is grown in their
coffee estate and cured by themselves. The profit made by this cafe is 2,50,000.
What would be the agricultural income for the PY 2022-2023?
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INCOME TAX –I PY 2022-2023, AY 2023-2024
7. From the following information compute agricultural income of Mr. Rajat,
a. Rent derived from agricultural land Rs.40,000
b. Sales of agricultural produce Rs.40,000,
c. Rent received from a storehouse Rs.4,000
Deductions claimed
Depreciation on plant and machinery used on the farm Rs.6,000
Expenses on sale of agricultural produce Rs.400
Insurance premium in respect of storehouse Rs.50
Collection charges of rent of storehouse Rs.300
House tax paid of dwelling house Rs.1,000
Repair charges of store house and dwelling house Rs.200 and Rs.500 respectively
Life insurance premium paid out of agricultural income Rs.2,000
Cost of seeds used Rs.500
Other expenses on cultivation of Rs.1,000
Tax paid to the state government on agricultural land let out Rs.2,[Link]
Agricultural Income for the Assessment Year 2023-2024.
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INCOME TAX –I PY 2022-2023, AY 2023-2024
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INCOME TAX –I PY 2022-2023, AY 2023-2024
8. M/s. Malhotra sugar mill grows sugarcane and the same is processed in the sugar mill
from the following particulars find out agricultural income and business income. Total
sugarcane crushed in the mill 9,700 tonnes. Sugarcane produced in the own agricultural
farm and supplied to own mill 600 tonnes.
Sugar cane purchased from the market is as under
a. 1,000 tons @Rs.1,200 per ton
b. 4,000 tons @ Rs.1,300 per ton
c. 2,000 tons @ Rs.1,350 per ton
d. 1,500 tons @ Rs.1,260 per ton
e. 600 tons @ Rs.1,000 per ton.
Expenses incurred on the agricultural form during the year are Rs. 3,02,000, previous
year profit was Rs. 6,80,000, Calculate agricultural income and business income for the
Assessment Year 2023-2024.
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INCOME TAX –I PY 2022-2023, AY 2023-2024
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INCOME TAX –I PY 2022-2023, AY 2023-2024
INTEGRATION OF AGRICULTURAL INCOME WITH NON-AGRICULTURAL INCOME
Integration is done only in case of individual, HUF, firm assessed as (AOP), BOI,
artificial judicial persons. Integration is done only if non-agricultural income exceeds
the exempted limits and net agricultural income exceeds Rs.5,000 in the previous year.
CALCULATION OF TAXABLE INCOME
Assessee AY = 23-24
PY = 22-23
Particulars ` `
Income under the Head Salary -----
Income from House property -----
Income from Business or Profession -----
Income from Capital Gain [STCG + LTCG] -----
Income from other sources: -----
General Income (sec 56(1))
Special Income (sec 56(2))
----
Less : Deduction Under section 80C -----
TOTAL INCOME -----
Add: Agricultural income (if it exceeds Rs. 5,000)
----
[ Agricultural income + Non Agricultural income] -----
Less: Income charged at special Rate of Tax ----
Balance Of Income after deducting ----
(STCG(STT)+LTCG+CASUAL INCOME)
Tax on the above balance as per slab rates ------
Less: Deduction on agriculture income
Agricultural income + Basic limit
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INCOME TAX –I PY 2022-2023, AY 2023-2024
Tax on above at slab Rate ----
Income charged at special Rate of Tax
STCG (STT) -----
LTCG
Casual Income
-----
-----
TOTAL ----
Add : [Link] @ 4% -----
Tax payable ----
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INCOME TAX –I PY 2022-2023, AY 2023-2024
Problems on Partial integration
1. Calculate Tax payable for the previous year 2022-2023 & assessment year 2023-
2024
Mr. Mukund [Link] [Link]
45yrs 65 years 82 yrs
Total Income 50,000 3,50,000 11,00,000
Agricultural Income 2,00,000 4,000 15,000
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INCOME TAX –I PY 2022-2023, AY 2023-2024
2. Calculate the Tax liability of [Link] for the Assessment year 2023-2024.
Net Agricultural Income Rs. 50,000
Non Agricultural Income Rs. 3,25,000
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INCOME TAX –I PY 2022-2023, AY 2023-2024
3. From the following particulars, calculate tax liability for the assessment year 2023-2024.
If Mr. Ramesh‘s Salary Rs.4,00,000, house Property income Rs.15,000 and net
agricultural income Rs.2,00,000, Investment as per 80C Rs.70,000.
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INCOME TAX –I PY 2022-2023, AY 2023-2024
4. From the following information calculate the amount of tax payable by the assessee
for the assessment year 2023-2024.
Assessee: Mr. Mohit
Salary Rs.4,00,000 LTCG Rs.1,00,000
Winnings from horse race
House property(C) Rs.2,00,000 Rs.10,000
Agricultural income
Business Rs.1,00,000 Rs.2,50,000
Investment as per 80 C
STCG Rs.15,000 Rs.1,00,000
STCG (STT) Rs.20,000 Profit on sale of car Rs.20,000
used for domestic use
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INCOME TAX –I PY 2022-2023, AY 2023-2024
5. [Link] submits the following information
House Property Rent(Computed) Rs. 1,20,000
Bank interest on Fixed deposits Rs. 50,000
Short term capital gain on sale of a plot Rs. 70,000
Income from growing & manufacturing Tea in India(gross) Rs.1,70,000
Expenditure on earning Tea income Rs. 16,000
Determine Tax Liability of [Link] for the Ay 2023-2024 on the assumption that
he contributes Rs.8,500 towards PPF.
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INCOME TAX –I PY 2022-2023, AY 2023-2024
6. Compute the tax liability of [Link] who is 65 years old. His Non-Agricultural income
is Rs.3,12,000 and net agricultural income is Rs.70,000 for the assessment year 2023-2024.
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INCOME TAX –I PY 2022-2023, AY 2023-2024
7. Compute tax liability of Surendar, a physically handicapped person who is 67 years
old for the assessment year 2023-2024. From particulars given below:
Professional gain Rs.5,80,000
Income from House Property(Computed) Rs.31,000
Short term Capital gain Rs. 6,000
Long term Capital gain Rs.20,000
Punjab state lottery prize Rs.50,000
Agricultural income (Net) Rs.20,000
Amount invested in NSC VIII issue Rs.30,000
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INCOME TAX –I PY 2022-2023, AY 2023-2024
Capital Vs Revenue
Capital Receipt Revenue Receipts
Income received towards fixed capital Eg. Income received towards circulating
Share capital working capital Eg. Stock in trade
Any sum received as capital even though it Whereas amount received as revenue
is a revenue payment for the payer even though it is a capital payment
(compensation for termination of sources of (purchase of a car)
income)
Any sum received under the insurance Whereas a sum received on insurance
policy which is relating to a capital asset is
policy towards a circulating asset is a
a capital receipt revenue receipt ( in case of fire
insurance)
Gain arising from exchange rate fluctuation Gain arising from exchange rate
where such currencies are held as fluctuation in the normal course of
investments business.
A receipt in lieu of source of income which Where a receipt in lieu of income which
no more continues in future (compensation discontinues for a temporary period and
for permanent disablement) continues is a revenue receipt.
(compensation for temporary
disablement)
Subsidy received to set up a business Subsidy received to develop or carry out
the business activity
Capital expenditure Vs Revenue expenditure
Capital expenditure Revenue expenditure
Purchase of fixed asset and extension or Maintenance of fixed asset
improvement
Non-recurring in nature Recurring in nature
Expenditure incurred to acquire a source Expenditure incurred to generating an
of income is capital income is revenue
Expenses incurred to earn super profits Expenses to maintain the current level
of profits
Benefit is for several years Whereas benefit is only for one
previous year
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INCOME TAX –I PY 2022-2023, AY 2023-2024
Capital Loss Vs Revenue Loss
Capital losses Revenue losses
1. Loss due to the sale of the capital asset. [Link] due to sale of goods of the business
2. Loss due to the withdrawal of money 2. Loss sustained by embezzlement done
from the bank and misappropriated it. by an employee
3. The amount deposited by a person with 3. The loss sustained by theft committed
any company and lost due to the company by an employee during usual business
being liquidated. hours or outside business hours.
4. Theft committed by an employee by 4. Loss of money when a cashier lost his
breaking into business premises. money on his way to the bank to deposit
money.
Problems
Determine the nature of the following transactions with reasons:
Sale of assets of a firm at the time of its conversion
into the company for shares of equal value – part
of the consideration is attributable to the sale of
land.
Profit due to fluctuation in the rate of foreign
currency.
Money received as the consideration for not
resigning directorship.
Expenses incurred in connection with litigation
relating to the acquisition of capital assets of a
business.
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INCOME TAX –I PY 2022-2023, AY 2023-2024
Explain the mode of treatment of the following:
An employee of a business was going to the
bank to deposit some money belonging to the
business. On the way to the bank, he lost it.
The loss sustained by a business as a result of
theft committed by an employee during usual
working hours of the business.
A cloth merchant dealing in Government
securities sold securities worth. ` 25,000. This
amount was lost by him as a theft committed on
a railway station.
State with reasons the nature of the following
A railway passenger meets with an accident and is
disabled. He receives compensation from the
Indian Railways.
Mr Ram Gopal Varma agreed to sell the partial
copyright of Rangeela film to a TV channel to
telecast the same. Intern the TV channel sold the
same copyright to other different channels. Due to
infringement of the contract, Mr RV was awarded
compensation.
A company made the annual payment for trucks
bought under a
Hire purchase agreement extending over a period
of years.
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INCOME TAX –I PY 2022-2023, AY 2023-2024
An assessee carried on business in several
commodities. In the course of business, he
submitted tenders to the railways and undertook to
supply certain commodities. The amount which he
had deposited as security for proper carrying out
the contract was forfeited as he could not carry out
the contract.
Winnings received from lottery
Retrenchment compensation
received from Siemens company – India
Pension received after retirement
Profit on sale of a Land in Mysore
Interest on Bank Deposits
Insurance compensation received on theft of a car
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