1. A partner is receiving salary from a partnership firm, which is deriving Agricultural income only. Shall such income be termed as agricultural income?
In this instant case, the salary received by Suresh Kumar from
the partnership firm deriving agricultural income only shall be exempted. As
laid down in the case of, CIT v. R.M. Chidambaram Pillai, such a firm
shall not be seen as a separate legal entity under the Income Tax Act.
Moreover, there is no employee-employer relationship in the instant case. In
the partner in himself constitutes the firm, thereby the salary received by him
is accrued from the profits of the firm which does the work of agriculture
forming a direct nexus. Thus, shall be exempted under section 10(2A) of the Income
Tax Act.
2. A person receiving rent from
Mr. K. Johar for allowing him film shooting at his Farmhouse situated in a
village. Will such income be termed as an agricultural income?
In this
instant case, the amount received as rent of Rs. 3,50,000 shall not be exempted
as the farmhouse given for shooting to Johar doesn’t satisfy the agricultural
needs. As laid down in the case of B. Naggi Reddy v. CIT, an
agricultural land given for shooting of film shall not be exempted or
considered as an agricultural income. Moreover, there is no specification that
the farmhouse has any agriculture produce. Either ways, this fact remains
immaterial as there was no basic operation and shooting a film has no nexus
whatsoever from income derived from an agriculture land. Hence no exemption
under section 10(1) of the IT Act.
3. Person receiving dividend
from Private company, which is deriving income from agriculture operations
only. Will such income be termed as agricultural income?
In the
instant case, the amount received of Rs. 2,50,000 as dividend from a company
deriving income from agriculture operations only shall not be exempted. As laid
down in the case of, Bacha F. Guzdar v. CIT wherein the shareholders
receiving dividend from agricultural operations were not exempted under section
10(1) of the IT Act. Reason behind the same is that reason behind such an
income is the dividend and not the agricultural land. The court held that only
in cases where the immediate reason of income is the agricultural land, the income
shall be exempted. Hence here, not exempted.
4. A person earning from the
sale of Teakwood which was drawn from the self-grown natural forest on the 20
Acre land owned by him. Will such income be termed as agricultural income?
In the
instant case Rs 2,00,00 from selling Teakwood which grew on its own as a
natural course, shall not be considered as an agricultural income. There are
two basic conditions as laid down by Justice Bhagwati in the case of CIT v.
Raja Benoy Kumar Sahas Roy that there ought to be basic operations prior to
the germination and full growth of a tree such as expenditure on human skill
and labour which will involve tilling of the land, sowing of the seeds, etc.
Subsequent operations also play a role which involve removing of the weeds,
adding fertilizers, etc. to make the produce fit for marketability, proving
there was no intervention of human agency. In the instant case no such
operation was done and hence not exempted under section 2(1A).
5. A person received
compensation from National Insurance Company for damage caused by hailstorm to
his wheat crop. Will such compensation be termed as agricultural income?
Any
compensation received from an insurance company for any damage which is caused
to the produce, in the instant case, wheat crop, shall be exempted from tax as
it is an agricultural income. Had not the crop not damaged due to the
hailstorm, it would have been produced and the sold which would be an
agricultural income. The insurance thereby compensates for such a loss. As laid
down in the case of CIT v. B Gupta Tea Pvt. Ltd. wherein the Greenleaf
of the assesse was damaged due to a hailstorm. In the instant case, the amount shall
be exempted from rule 8 of the Act.
Also read - Are Vertical Grown Mushrooms an Agricultural Product?
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