RULES FOR COMPUTATION OF NET AGRICULTURAL INCOME

Rule 1: Agricultural income of the nature referred to in sub-clause (a) of Clause (1A) of section 2 of the Income - Tax Act shall be computed as if it were income chargeable to income-tax under that Act under the head "Income from other sources" and the provisions of Sections 57 to 59 of that Act shall, so far as may be, apply accordingly;

Provided that sub-section (2) of section 58 shall apply subject to the modification that the reference to section 40A therein shall be construed as not including a reference to sub-sections (3) and (4) of section 40A.

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 of the cultivator or the receiver of 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 "Profit and gains of business or professions" and the provisions of sections 30, 31, 32, 36, 37, 38, 40, 40A (other than sub sections (3) and (4) thereof], 41, 43, 43A, 43B and 43C of the Income-Tax Act shall, so far as may be apply accordingly.

Rule 3: Agricultural income of the nature referred to in sub-clause (c) of clause (1A) of section 2 of the Income tax act, being income derived from any building required as a dwelling house by the receiver of the rent or revenue or the cultivator or the receiver of 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 "Income from house property" and provisions of sections 23 to 27 of that Act shall, so far as may be, apply accordingly-

Rule 4: Notwithstanding anything contained in any other provisions of these rules in a case - 

(a) where the assessee derives income from sale of tea grown and manufactured by him in India, such income shall be computed in accordance with Rule 8 of the Income-Tax Rules, 1962, and sixty percent of such income shall be regarded as the agricultural income of the assessee;

(b) where the assessee derives income from sale of centrifuged latex or cenex or latex based crepes (such as pale latex crepe) or technically specified block rubbers manufactured or processed by him  from rubber plants grown by him in India, such income shall be computed in accordance with rule 7A of the income tax rules, 1962, and sixty five percent of such income shall be regarded as the agricultural income of the assessee;

(c) where the assessee derives income from sale of coffee gorwn and manufactured by him in India, such income shall be computed in accordance with Rule 7B of the Income Tax Rules 1962, and sixty percent or seventy five percent, as the case may be, of such income shall be regarded as the agricultural income of the assessee.

Rule 5: Where the assesse is a member of an association of persons or a body of individuals (other than a HUF (Hindu Undivided Family, a company or a firm) which in the previous year has either no income chargeable to tax under the income tax act or has total income not exceeding the maximum amount not chargeable to tax in the case of an association of persons or a body of individuals (other than a HUF, a company or a firm) but has any agricultural income then, the agricultural income or loss of the association or body shall be computed in accordance with these rules and the share of the assessee in the agricultural income or loss so computed shall be regarded as the agricultural income or loss of the assessee of the association or body shall be computed in accordance with these rules and the share of the assessee in the agricultural income or loss so computed shall be regarded as the agricultural income or loss of the assessee.

Rule 6: Where the result of the computation for the previous year in respect of any source of agricultural income is a loss, such loss shall be set off against the income of the assessee, if any, for that previous year from any other source of agricultural income;

Provided that where the assessee is a member of an association of persons or a body of individuals and the share of assessee in the agricultural income of the association or body, as the case may be, is a loss, such loss shall not be set off against any income of the assessee from any other sources of agricultural income.

Rule 7: Any sum payable by the assessee on account on any tax levied by the State Government on the agricultural income shall be deducted in computing the agricultural income.