Question And Answer
Subject: Breeding, rearing of cows and buffaloes and selling of milk in village.
Querist: Manisha
Answered by:
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Date: January 2, 2023
Query asked by Manisha

I am a farmar in village owning 5 acres of agricultural land in Jind district of Haryana, which is being cultivated by me and my husband. My husband is a state government employee.

We also having 2 cows and 4 buffaloes along with 4 youngers of them. Totally 10 cattles. Income from sale of milk in village (neighborhood) is approximately 10,000/month and some times Ghee is also sold which comes to average of 3000/month.

Total income from wheat and rice crop is approximately 6 lakhs and from sale of milk and ghee is 1.5 lakhs. When a cow or buffalo is sold it comes to 1 lakh in addition.

I want to file my separate ITR to report the income from agricultural land. How the income of 1.5 lakhs from sale of Milk and 1 lakh from sale of a cattle be treated ? Which ITR, I may file.

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The Hon’ble Supreme Court in the case of CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC) held that Dairy-farming will not be ‘agricultural’ operation and income from dairy-farming will not also be ‘agricultural income’. Therefore, income from milk derived from milch cows maintained by the assessee, is not agricultural income.

The assessee will have to offer the same as business income.

Further, the Hon’ble High Court of Madhya Pradesh in the case of DCIT v. Smt. Suniti Singh [2008] 299 ITR 183 (Madhya Pradesh) relying on the decision of the Hon’ble Andhra Pradesh High Court in the case of Sri Krishna Dairy and Agricultural Farm v. CIT [1988] 169 ITR 291 (AP) held that the birth of calves is incidental to the business activity of the assessee, it was difficult to accepts them as assets as there was no cost of acquisition of calves and, therefore, gain which arose on such sale was not liable to tax as capitalgains.

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