TaxTMI 
TaxTMI 
1998 (11) TMI 155
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....tural income at Rs. 2,16,838. For the assessment year 1994-95, the assessee filed the return of income on 31st August, 1994 declaring total income of Rs. 2,55,710 and agricultural income at Rs. 1,33,740. In the case of Smt. Amrit Arvind Shah the assessee filed the return for the assessment year 1994-95 on 24-8-1994 declaring total income at Rs. 3,21,720 and agricultural income at Rs. 1,07,688. The Assessing Officer for this year taken the agricultural income at Rs. 96,816 for rate purposes. For the assessment year 1995-1996, the assessee declared the income of Rs. 4,69,110 and agricultural income at Rs. 1,46,187. 4. The assessees were asked to state the reasons as to why the agricultural income shown by them should not be included for the rate purposes. It was submitted that the agricultural incomes did not form the part of the total income of the assessee as per section 10(2A) of the Income-tax Act, 1961 and hence the same cannot be considered for rate purpose because of section 10(2A) of the Act. However, the Assessing Officer rejected the contentions of the assessees and held that the agricultural income has to be considered in the hands of the assessee for rate purposes. He,....
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....mitted that the only income that may not be included in the total income is the agricultural income. Agricultural income is defined in section 2(1A) of the Income-tax Act, 1961. Under the Finance Act, 1992, the net agricultural income is defined as under :- "2(9)(d) 'net agricultural income', in relation to a person, means the total amount of agricultural income, from whatever source derived of that person computed in accordance with the rules contained in Part IV of the First Schedule." Coming to Part IV of the First Schedule, the learned Departmental Representative submitted that in the instant case of the assessee Rule 2 is applicable which reads as under :- "Rule-2 - Agricultural income of the nature referred to in sub-clause (b) or sub-clause (c) of clause (1A) of section 2 of the Income-tax Act (other than income derived from any building required as a dwelling house by the receiver of the rent or revenue or the cultivator or the receiver or rent-in-kind referred to in the said sub-clause (c) shall be computed as if it were income chargeable to income-tax under that Act under the head "Profits and gains of business or profession" and the provisions of sections 30, 31....
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.... whatever sources derived of that person computed in accordance with the rules contained in Part IV of the First Schedule. The learned Departmental Representative's argument that as far as the assessees are concerned, definition given in section 2(1A) applies is a difficult proposition to accept. It defines only what is the agricultural income means and it does not form a part of the assessment procedure. Section 2(1A) defines "agricultural income" and "agricultural income" means any rent or revenue derived from land which is situated in India and is used for agricultural purposes. This definition has widen the scope of agricultural income which includes rent and revenue derived from the land. Sub-section (b) of this section states that it includes any income derived from such land. Rates of income . are provided in the Finance Act and newly inserted section 2(9)(d). I have already noted, it provides that "net agricultural income" should be computed in accordance with rule contained in Part IV of the First Schedule. The learned Departmental Representative's argument is that as far as the assessees are concerned, since section 2(1A) is applicable the net agricultural income should b....
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....sub-sections (1), subsection (2) and sub-section (3) of the Income-tax Act and the shares so computed shall be regarded as the agricultural income or loss of the assessee. Proviso to this section further states that nothing contained in this rule shall apply for computing the agricultural income of the assessee in relation to the assessment year commencing on or after the 1st day of April, 1993. Therefore, it makes clear that in the case of the assessees, Rule 5 shall not be applicable. Section 10(2A) inserted with effect from 1-4-1993 reads as under :- "in the case of a person being a partner of a firm which is separately assessed as such, his share in the total income of the firm shall not form part of total income of the Partner". Explanation - For the purposes of this clause, the share of a partner in the total income of a firm separately assessed as such shall, notwithstanding anything contained in any other law, be an amount which bears to the total income of the firm the same proportion as the amount of his share in the profits of the firm in accordance with the partnership deed bears to such profits." Therefore, it is clear that on or after from 1st day of April, 1....