Expenses incurred to earn agricultural income cannot be allowed as expenditure in computing the business income

KANCOR FLAVOURS & EXTRACTS LTD. Vs DCIT ITAT, Cochin Bench : ITA Nos. 714 & 715/Coch/2005 AYs- 1994- 95 & 1996- 97 Gist of decision : Agricultural income is not only exempt from tax, but under the scheme of the IT Act, 1961 is also to be excluded in computing the total income. In the present  case, the assessee has earned some agricultural income by way of sale of white chillies cultivated by it. But the expenses for farming the white chillies were more than such income. Therefore, the assessee had to debit the net expenses in its P&L a/c. If, on the other hand, there was a su...