Income from Tea Grown and Manufactured. Income derived from the sale of tea grown and manufactured by the assessee in India is considered to be business income. Under rule 8 of the Income-tax Rules, 1962, 40% of the profit derived from tea industries shall be business income and remaining 60% is treated as agricultural income. So the profits of such business are partly taxable and partly non-taxable, 40% of profits are taxable as business profit and 60% profits are treated as agricultural income.
Sugar Mill Companies. One adjustment is to be noted carefully in case of sugar mill companies owning their own agricultural farms.
In such cases, the profit and loss account of the sugar mill is to be debited with the market value of the sugarcane crushed and grown in their own farms and cultivation expenses of the sugarcane grown in own farm are not to be debited to the profit and loss account. By this adjustment, the profit derived from the running of the agricultural farm can be allocated and so this profit will not be taxable as agricultural income.