Is the income from dairy exempt under the Income Tax Act?
Income from dairy is not exempt from tax for following reasons:
1. Tax on agriculture income is State Subject , so under Income Tax Act , section 10(1) exempts the income from agriculture.
2. What can be agriculture income is defined in section 2(1A) of the Income Tax Act . This definition does not mention Dairy Farming as agriculture operation.
3. What constitutes Agriculture Income have been raised before Courts and we the benefits of decision on Supreme Court on the issue . As per Supreme Court decision , following fundamental things must be there , before an income can be called agriculture income:
1. The land should be used , which must be agriculture land.
2. The land must be assessed by the State Agriculture Revenue department. If not , the agriculture land must be beyond the limit of distance from municipal corporation or cantonment set out in section 2(1) of I.T.Act
3. There must be agriculture activity like tilling, sowing etc which are associated with agriculture operations.
Then only such income can be called the Agriculture Income.
Income from Self grown tree, jungle , or vegetables grown on roof top are held by courts and tribunal as NOT an Agriculture Income .
Income from dairy can not satisfy the conditions of it considered as Agriculture Income , there for it is not exempt.
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