Gist of selected judgments of

supreme court/high courts [1922 - march 2005]*

Section 2(1A)

Agricultural income

Constitutional validity - Explanation to section 2(1A) is constitutionally valid - The amendment which is made by the Parliament in the Income-tax Act by inserting the Explanation to section 2(1A) is within the competence of the Parliament under Entry 82, List I of Seventh Schedule to the Constitution- Singhai Rakesh Kumar v. Union of India [2001] 247 ITR 150/115 Taxman 101 (SC).

Decision of the Supreme Court in Union of India v. S. Muthyam Reddy [1999] 240 ITR 341 holding that revenue derived from land would not include income arising from transfer of any land referred to in section 2(14)(iii)(a) or (b) and as such income derived from sale of such agricultural lands cannot be treated as agricultural income, requires reconsideration by a larger Bench - CIT v. K. Anita Reddy [2001] 247 ITR 94 (SC).

Burden of proof

Onus is on assessee - The assessee has to put before the income-tax authorities proper materials which will enable them to come to a conclusion that the income which is sought to be assessed, is agricultural income. It is not for the income-tax authorities to prove that it is not agricultural income - CIT v. R. Venkataswamy Naidu [1956] 29 ITR 529 (SC).

A person who claims the benefit to an exemption has to establish it. Thus, burden of proof is on assessee to prove that his income is agricultural income which is exempt from tax - CIT v. Ramakrishna Deo [1959] 35 ITR 312 (SC).

Basic Requisites/Conditions

Source of receipt or method of calculation is not relevant - Where an assessee receives income, not itself of a character to fall within the definition of ‘agricultural income’ contained in the Act, such income does not assume the character of agricultural income by reason of the source from which it is derived, or the method by which it is calculated. But if the income received falls within the definition of ‘agricultural income’, it earns exemption, in whatever character the assessee receives it - Premier Construction Co. Ltd. v. CIT [1948] 16 ITR 380 (PC).

Character of recipient is not relevant - Agricultural income is excluded altogether from the scope of the Act. The exemption is conferred indelibly on a particular kind of income and does not depend upon the character of the recipient. Such income does not become assessable as business profits merely because it is received by the assessee, not as an ordinary landlord or proprietor, but as a part of the income, profits or gains of a money-lending business carried on by him - CIT v. Sir Kameshwar Singh [1935] 3 ITR 305 (PC).

Income from land situated outside India is excluded - Income from agricultural lands situated in Pakistan is not agricultural income within the meaning of the Indian income-tax. Similarly if there is a figure of loss from agricultural lands, situated in Pakistan, it has got to be deducted while computing the total income of the resident assessee in India - CIT v. Carew & Co. Ltd. [1979] 120 ITR 540 (SC).

Captive consumption of agricultural produce will be agricultural income - When the assessee raises agricultural produce and uses it as raw material, there cannot be a sale by the assessee to the assessee himself; but yet the agricultural produce raised by the assessee would constitute agricultural income within the meaning of section 2(1) and this income is not liable to tax - Nizam Sugar Factory Ltd. v. AAC [1971] 80 ITR 547 (AP).

Agriculture/Agricultural operations

‘Agriculture’/‘Agricultural operations’ is an integrated activity of basic operations, followed by subsequent operations - The primary sense in which the term agriculture is understood is agar - field and cultura - cultivation, i.e., the cultivation of the field, and if the term is understood only in that sense, agriculture would be restricted only to cultivation of the land in the strict sense of the term meaning thereby tilling of the land, sowing of the seeds, planting and similar operations on the land. They would be the basic operations and would require the expenditure of human skill and labour upon the land itself. There are, however, other operations which have got to be resorted to by the agriculturist and which are absolutely necessary for the purpose of effectively raising the produce from the land. They are operations to be performed after the produce sprouts from the land, e.g., weeding, digging the soil around the growth, removal of undesirable undergrowths and all operations, which foster the growth and preserve the same not only from insects and pests but also from depredation from outside, like tending, pruning, cutting, harvesting, and rendering the produce fit for the market. The latter would all be agricultural operations when taken in conjunction with the basic operations described above, and it would be futile to urge that they are not agricultural operations at all.

However, the mere performance of these subsequent operations on the products of the land, where such products have not been raised on the land by the performance of the basic operations described above, would not be enough to characterise them as agricultural operations. In order to invest them with the character of agricultural operations, these subsequent operations must necessarily be in conjunction with and in continuation of the basic operations which are the effective cause of the products being raised from the land. It is only if the products are raised from the land by the performance of these basic operations that the subsequent operations attach themselves to the products of the land and acquire the characteristic of agricultural operations. The cultivation of the land does not comprise merely of raising the products of the land in the narrower sense of the term like tilling of the land, sowing of the seeds, planting and similar work done on the land but also includes the subsequent operations set out above, all of which operations, basic as well as subsequent, form one integrated activity of the agriculturist and the term ‘agriculture’ has got to be understood as connoting this integrated activity of the agriculturist. One cannot dissociate the basic operations from the subsequent operations and say that the subsequent operations, even though they are divorced from the basic operations, can constitute ‘agricultural operations’ by themselves. If this integrated activity which constitutes ‘agriculture’ is undertaken and performed in regard to any land, then that land can be said to have been used for ‘agricultural purposes’ and the income derived therefrom can be said to be ‘agricultural income’ derived from the land by agriculture - CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC).

‘Agriculture’ is not confined to produces meant for human beings/beasts - The nature of products raised on the land may be grain or vegetables or fruits which are necessary for the sustenance of human beings including plantations and groves or grass or pasture for consumption of beasts or articles of luxury such as betel, coffee, tea, spices, tobacco, etc., or commercial crops like cotton, flax, jute, hemp, indigo, etc. All these are products raised from the land and the term ‘agriculture’ cannot be confined merely to the production of grain and food products for human beings and beasts but must be understood as comprising all the products of the land which have some utility either for consumption or for trade and commerce and would also include forest product such as timber, sal and piyasal trees, casuarina plantations, tendu leaves, borra nuts, etc. - CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC).

‘Agriculture’ will not embrace all activities having connection with land - There is no warrant for the extension of the term ‘agriculture’ to all activities in relation to the land or having connection with the land including breeding and rearing of live-stock, dairy-farming, butter and cheese-making, poultry farming, etc. The mere fact that an activity has some connection with or is in some way dependent on land is not sufficient to bring it within the scope of the term and such extension of the term ‘agriculture’ is unwarranted. The term ‘agriculture’ cannot be dissociated from the primary significance thereof which is that of cultivation of the land and even though it can be extended in the manner stated before both in regard to the process of agriculture and the products which are raised upon the land, there is no warrant all for extending it to all activities which have relation to the land or are in any way connected with the land. The use of the word ‘agriculture’ in regard to such activities would certainly be a distortion of the term - CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC).

Agricultural purpose

Some measure of cultivation/labour/skill must be present - No assistance is to be got from the meaning ascribed to the word ‘agriculture’ in other statutes and, though it must always be difficult to draw the line, yet, unless there is some measure of cultivation of the land, some expenditure of skill and labour upon it, it cannot be said to be used for agricultural purposes within the meaning of the Act - Raja Mustafa Ali Khan v. CIT [1948] 16 ITR 330 (PC).

Agricultural process

‘Market’ need not necessarily exist physically - ‘Market’ in the context of rule 7 does not mean an open market where buyers and sellers get together for the purpose of purchase and sale of goods. If the market is controlled by the Government regulation, sale and purchase of sugarcane within the framework of these regulations will be the ordinary mode of selling sugarcane. No special significance can be read into the phrase ‘ordinarily sold’. The place where sugarcane is bought and sold is quite immaterial for deciding whether there was a market for sugarcane or not. The place of delivery of the goods may be decided by the buyer and seller by mutual consent, express or implied. The principle that value of a property will be the price which it will fetch if sold in the open market is a well-known method of valuation which has been adopted in large number of statutes in England and also in India. It is well-settled that existence of an open market is not a pre-condition for application of this principle. There may or may not be an actual market where buyers and sellers congregate to purchase and sell goods. Where there is no such open market, an estimate of the market price will have to be done on a hypothetical basis. Therefore, in order to find out the market price it is not necessary that there has to be an actual market where there will be a ‘concourse of buyers and sellers’. For determination of market value, there is no pre-requisite that an open market where buyers and sellers congregate to buy and sell goods must exist - Thiru Arooran Sugars Ltd. v. CIT [1997] 93 Taxman 579/227 ITR 432 (SC).

Determination of market value - Rule applicable - The ‘market value’ spoken of in sub-rule (1) of rule 7 will have to be determined in the manner laid down in sub-rule (2). Sub-rule (2) lays down in clause (a) the well-known formula of average price of the goods ordinarily sold in the market as market value of the goods. The formula contained in clause (b) of rule 7(2) will only apply in cases where agricultural produce is not ordinarily sold in the market in its raw state or after any process is applied to it to make it marketable. Under rule 7(1), in computing the profits and gains of business, market value of an agricultural produce in raw state has to be deducted from the profits of partly agricultural and partly industrial products. Sub-rule (2) lays down the method of computation of market value. If the agricultural produce is ordinarily sold in the market, rule 7(2)(a) will apply. If not, rule 7(2)(b) will apply - Thiru Arooran Sugars Ltd. v. CIT [1997] 93 Taxman 579/227 ITR 432 (SC).

Illustrative cases

u Conversion of sugarcane into gur is not an agricultural process - Seth Banarsi Das Gupta v. CIT [1977] 106 ITR 804 (All.).

u Conversion of sugarcane into jaggery is an agricultural process - CIT v. H.G. Date [1971] 82 ITR 71 (Bom.).

u Conversion of coconut into copra is an agricultural process - CIT v. P.K. Veeran [1964] 54 ITR 393 (Ker.).

u Processes which are necessary to make the tobacco fit for export, cannot be said to be the processes necessary to make the tobacco marketable. The income attributable to such operations cannot, therefore, be treated as agricultural income - Boggavarapu Peda Ammaiah v. CIT [1964] 54 ITR 578 (AP).

u Where an assessee grows mulberry leaves and rears silkworms, and then sells the silk cocoons in the market, the agricultural produce of the cultivator will be mulberry leaves and by no stretch of imagination can the silkworms and certainly not the silk cocoons be regarded as the agricultural produce of the cultivator. Hence, the income derived by the assessee from the sale of cocoons could not in law be regarded as agricultural income - K. Lakshmanan & Co. v. CIT [2000] 108 Taxman 167/239 ITR 597 (SC).

u Where the assessee sold plants in pots after carrying out basic operations on the land by expending human skill and labour, and thereafter the resultant product which was found suitable was nurtured in a pot, watered, and placed in the green house or in shade, and then the assessee performed several operations such as weeding, watering, manuring, etc., so as to make them ready for sale, all these operations would be agricultural operations. The plants sold by the assessee in pots were the result of primary as well as subsequent operations comprehended within the term ‘agriculture’, and they are clearly the products of agriculture - CIT v. Soundarya Nursery [2000] 241 ITR 530 (Mad.).

Agricultural produce

Sale of agricultural produce is covered under items (ii) and (iii), but not under item (i), of  section 2(1A)(b) - Section 2(1A)(b)(iii) in terms and expressly refers to the income derived from sale. It refers to the sale price realised either by the cultivator or the receiver of rent-in-kind by the sale of the produce in respect of which the process as contemplated by clause (ii) has been performed. It is significant that the sale to which clause (iii) refers must be the sale of produce which has not been subjected to any process other than that contemplated by clause (ii). Thus, it may be stated that reading clauses (ii) and (iii) together they contemplate the sale of the produce—clause (ii) indirectly inasmuch as it refers to the process employed for making the produce marketable and clause (iii) directly inasmuch as it refers to the price realised by sale of the produce which has been subjected to the process contemplated by clause (ii). Therefore, it is clear that income derived from sale of agricultural produce has been provided for by clauses (ii) and (iii) and prima facie that would show that clause (i) which does not refer to sale even indirectly cannot be intended to cover cases of income derived from the sale of agricultural produce - Dooars Tea Co. Ltd. v. CAIT [1962] 44 ITR 6 (SC).

Tea bushes are not agricultural produce - Tea bushes are planted to obtain tea leaves. The tea bushes continue to remain even after plucking of tea leaves. For the purpose of plucking tea, the tea bushes are never cut down. Although agricultural activity is involved in nurturing the tea bushes for the purpose of obtaining tea leaves, the produce that is available is the tea leaves alone and not the tea bushes as such. Tea bushes as such are not sold to derive any income. Thus, ‘tea bushes’ should not be taken as a part of ‘agricultural land’ but as a part of capital assets of the assessee’s tea business - CIT v. Suman Tea & Plywood Industries (P.) Ltd. [1997] 226 ITR 34/94 Taxman 305 (Cal.).

Farm House

Occupation must have connection with land - The word ‘requires’ in proviso to section 2(1)(c) means that the assessee demands to appropriate the building for the purpose of a dwelling house, or as a store house, or other out-building and the words ‘by reason of his connection with the land’ mean that only the fact of his being a receiver of rent or revenue or the fact of his being a cultivator, or the fact that he is a receiver of rent in kind entitles him to claim any building as a dwelling house, a store house or an out-building. If he should not occupy any of these positions in connection with the land he is not entitled to claim as tax free accommodation of the kind specified. In other words, the expression ‘by reason of his connection with the land’ is merely used to explain the nature of the class of persons entitled to exemption - Raja Rajendra Narayan Bhanja Deo v. CIT 4 ITC 15 (Pat.) (FB).


Meaning of rent/revenue - The word ‘rent’ means payment of money in cash or in kind by any person to the owner in respect of grant of right to use land. The expression ‘revenue’ is, however, used in the broad sense of return, yield or income and not in the sense of land revenue only - Raza Buland Sugar Co. Ltd. v. CIT [1980] 123 ITR 24 (All.).

Interest on arrears of rent is not agricultural income - Interest on arrears of rent payable in respect of land used for agricultural purposes is not agricultural income - CIT v. Raja Bahadur Kamakhya Narayan Singh [1948] 16 ITR 325 (PC).

Dividend received from company having only agricultural income is not ‘revenue derived from land’ - In fact and truth dividend is derived from the investment made in the shares of the company and the foundation of it rests on the contractual relations between the company and the shareholder. Dividend is not derived by a shareholder by his direct relationship with the land. There can be no doubt that the initial source which has produced the revenue is land used for agricultural purposes, but to give to the words ‘revenue derived from land’ the unrestricted meaning apart from its direct association or relation with the land, would be quite unwarranted - Mrs. Bacha F. Guzdar v. CIT [1955] 27 ITR 1 (SC).

Salami received under leases, which are not precarious, is not ‘rent or revenue derived from land’ - Where salami was in the form of a lump sum non-recurring payment made by a prospective tenant to the landlord as a consideration for the settlement of agricultural land and parting with certain rights of the landlord in the land in favour of the prospective tenant, and was paid anterior to the constitution of relationship of landlord and tenant, and the manner in which the leases were dealt with and the fact that in no case was a non-occupancy tenant evicted and his tenure was allowed to mature into an occupancy holding would show that the leases were in practice not precarious, but had an element of stability and permanency attached to them and salami so paid was neither rent nor revenue within the meaning of the definition of ‘agricultural income’ - Member for the Board of Agricultural Income-tax v. Sindhurani Chaudhurani [1957] 32 ITR 169 (SC).

Annuity received in exchange of agricultural lands is not ‘rent or revenue derived from land’ - Where the assessee had exchanged his agricultural land for a certain annuity payable for life, payment of which was secured by creating a charge on land, it was impossible to hold that such annuity was agricultural income within the meaning of the Act; it was not rent or revenue derived from land; it was money payable under a contract imposing a personal liability on the covenantor who was at liberty to make the payments out of any of her moneys, and was bound to make them whether the land was sufficiently productive or not - Maharajkumar Gopal Saran Narain Singh v. CIT [1953] 3 ITR 237 (PC).


Compensation for acquisition of land - Where land of assessee-tea company was requisitioned by State Government and same was given to refugees who carried on cultivation thereon and at time of requisition assessee too was carrying on agricultural operations on land, compensation received by assessee was to be treated as agricultural income - CIT v. All India Tea & Trading Co. Ltd. [1996] 85 Taxman 391/219 ITR 544 (SC).

Compensation for loss of tea estate is agricultural income - Where the assessee received compensation from the insurance company for loss to its tea garden by hailstorm, the entire receipt under the insurance policy would be assessable as agricultural income and no part of the said income could be apportioned under rule 8 - Camellia Tea Group (P.) Ltd. v. CIT [1993] 70 Taxman 350/203 ITR 80 (Cal.)/CIT v. B. Gupta (Tea) (P.) Ltd. [1969] 74 ITR 337 (Cal.).

Compensation received for requisitioned lands is ‘revenue derived from land’ - Where land of assessee-tea company was requisitioned by State Government and same was given to refugees who carried on cultivation thereon and at time of requisition assessee too was carrying on agricultural operations on land, compensation received by assessee was to be treated as agricultural income since such compensation clearly had the character of rent or, in any case, had to be regarded as revenue derived from the land - CIT v. All India Tea & Trading Co. Ltd. [1996] 85 Taxman 391/219 ITR 544 (SC).


Where assessee had stopped agricultural operations on rubber plantation sold by it, damages received from vendees for delayed payment of sale consideration could not be treated as agricultural income - Malabar Industrial Co. Ltd. v. CIT [2000] 109 Taxman 66/243 ITR 83 (SC).

Hire charges

Income from letting of garden for film shooting is not agricultural income - Where the assessee owning a garden in which agricultural produce were grown let out the garden on hire for shooting of films, the hire charges received will not constitute agricultural income, since the shooting of films was an activity having absolutely no nexus whatsoever with the agricultural operations or the land. The argument that but for the agricultural activity the film producers would not be interested in hiring the garden for film shooting creates a nexus which is non-existent, far-stretched and illusory. If such an argument were to be accepted, then anything done and everything done on the land would reach the pedestal meant for ‘agricultural income’ and would yield absurd results - B. Nagi Reddi v. CIT [2002] 258 ITR 719/125 Taxman 20 (Mad.).


Income from lease of estate is agricultural income - If a tea estate engaged in producing agricultural product is leased out, the rent or share of profits derived from it will certainly be treated as agricultural income - CIT v. Haroocharai Tea Co. [1978] 111 ITR 495 (Gauhati).


Remuneration for managing agricultural property is not agricultural income - Remuneration paid to the partner of a firm, owing agricultural estate, for managing estate is not agricultural income in the partner’s hands. Such remuneration, even though the property managed is agricultural, is in the nature of ‘salary’; the mere fact that its ultimate source is agricultural property will not make it agricultural income because the payment is received not as part of his profit from the agricultural property but as remuneration due to him for work done as manager of the property - E.C. Danby v. CIT [1944] 12 ITR 351 (Pat.)/S.A. Ramaraj v. CAIT [1969] 71 ITR 108 (Ker.).

Remuneration to partner - Remuneration received by partner of assessee-firm from a company which owned agricultural lands does not constitute agricultural income - CIT v. Kodanad Tea Estates Co. [2000] 112 Taxman 626 (Mad.).

60 per cent of salary paid to partner of firm engaged in tea growing and selling, is exempt - Where salary was paid to a partner of a firm which grew and sold tea, the salary to the extent of 60 per cent was exempt and the remaining 40 per cent alone was taxable in the partner’s hands - CIT v. R.M. Chidambaram Pillai [1977] 106 ITR 292 (SC).


Replanting subsidy is not agricultural income - Replanting subsidy received from Rubber Board is not agricultural income - Vaikundam Rubber Co. Ltd. v. State of Tamil Nadu (No. 1) [1993] 202 ITR 586 (Mad.)/CIT v. Malayalam Plantations (India) Ltd. [1993] 204 ITR 735 (Ker.).

Forest trees of spontaneous growth

Where no basic operations are involved income is not agricultural - In order to decide whether the income received by the sale of trees in forests is agricultural income or not, the crucial question to be answered is; were those trees planted by the proprietors of the estate or did they grow spontaneously ? If it is the latter it would be wholly immaterial that the owner has maintained a large establishment for the purpose of preserving the forests and assisting in the growth of the trees, because ex hypothesis he performed no basic operations for bringing the forests into being - CIT v. Ramakrishna Deo [1959] 35 ITR 312 (SC). See also - Raja Mustafa Ali Khan v. CIT [1948] 16 ITR 330 (PC) and Sri Rajah Ravu Venkata Mahipathi Gangadhara Rama Rao Bahadur, Yuvarajah of Pithapuram v. CIT [1949] 17 ITR 445 (PC).

Only if subsequent operations are integrally connected with basic operations, income is agricultural - Products which grow wild on the land or are of spontaneous growth not involving any human labour or skill upon the land are not products of agriculture and the income derived therefrom is not agricultural income.

Where, however, the assessee performs subsequent operations on these products of land which are of wild or spontaneous growth, the nature of those operations would have to be examined to see if they are performed in conjunction with the basic operations of cultivation of the land. If so, the product can be treated as agricultural product - CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC). See also Maharajadhiraj Sir Kameshwar Singh v. CIT [1957] 32 ITR 587 (SC).

Shade trees

Where trees were already existing, income is not agricultural - Where the rosewood trees were not planted by human agency or labour but they were in existence before the coffee estates were opened and they were retained as shade trees for the coffee bushes, income from such trees was not agricultural income - Consolidated Coffee Estates (1943) Ltd. v. CAIT [1970] 76 ITR 29 (Mys.).

Growing crops

Where crops already existed, income therefrom is not agricultural - Where the assessee-company had purchased an estate along with crops which had already been harvested and had paid separately for the crop; it was held that income from the crop was not agricultural income, since such income had not arisen out of any agricultural operations carried on by the assessee - CAIT v. New Ambadi Estates Ltd. [1967] 63 ITR 325 (SC).


Keeping and running nurseries is not agricultural activity - Even if the keeping of a nursery necessarily means the use of some land and earth for the purposes of rearing plants, that would not by itself amount to carrying on a primary agricultural operation in the sense of cultivating fields. Any place where young plants re-reared and kept is spoken of as a ‘nursery’. The keeping and running of a nursery as a business does not generally involve the ordinary processes of cultivation of fields at all - H.H. Maharaja Vibhuti Narain Singh v. State of UP [1967] 65 ITR 364 (All.).


Lac cultivation is not agricultural operation - Lac cultivation cannot be regarded as agricultural operation and, therefore, income from such cultivation is not agricultural income - Beohar Singh Raghubir Singh v. CIT [1948] 16 ITR 433 (Nag.).


Income from rubber is not agricultural income - The income derived by a person by sale of rubber obtained by slaughter-tapping of trees, which he has purchased for being cut and removed, is not the agricultural income - C.P.A. Yoosuf v. ITO [1970] 77 ITR 237 (Ker.).

Tender forms

Sale of tender forms is not part of agricultural operations - The receipt by the assessee, a State Government undertaking engaged in cultivation of sugarcane by way of sale of tender forms does not partake of the character of agricultural income. The connection with the agricultural operation of such income is very remote. It also cannot be considered that the sale of tender forms is incidental to and so intimately connected with the agricultural operations so as to make it part of the agricultural operations. Therefore, the amount received by the sale of tender forms is not agricultural income - State Farming Corpn. v. CIT [1990] 181 ITR 271 (Ker.).


Extracting and vending of toddy - Income derived from toddy is agricultural income when it is received by the actual cultivator, whether owner or lessee of the land on which the trees grow. If the income is obtained by a person who has not produced the trees from which the toddy is tapped, or has not done any agricultural operations whereby those trees have been raised, it is not agricultural income within the meaning of the Act - Yagappa Nadar v. CIT 2 ITC 470 (Mad.).

Extracting of toddy and vending of toddy are not agricultural processes, and hence income therefrom is not agricultural income - Sri Ranganatha Enterprises v. CIT [1998] 232 ITR 568 (Ker.).

Eucalyptus Oil

Sale proceeds of eucalyptus oil - The sale proceeds of eucalyptus oil extracted by the assessee from the leaves of the eucalyptus trees grown by it would not be the nature of agricultural income - CIT v. Stanes Amalgamated Estates Ltd. [1998] 232 ITR 443 (Mad.).


Income from dairy-farming is not agricultural income - 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 - State of Orissa v. Ram Chandra Choudhury [1962] 46 ITR 246 (Ori.).

Tea manufacturer

Computation of composite income derived from sale of tea grown and manufactured by seller and exported out of India - For computation of composite income derived from sale of tea grown and manufactured by seller and exported out of India under section 2(1A), read with rule 8, deduction under section 80HHC, in respect of profits derived from export of tea out of India, would be allowed as permissible deduction before apportionment of non-agricultural and agricultural income under rule 8, and thereafter, income so computed, as if it is a business income is to be apportioned on basis of 40 per cent, being non-agricultural income and 60 per cent, being agricultural income - Bazaloni Group Ltd. v. CIT [2005] 143 Taxman 236 (Gauhati).