CMA Intermediate · Direct and Indirect Taxation · Agricultural Income
Kerala Rubber Estates, a firm, grows rubber plants and manufactures latex-based rubber sheets for sale. Profit from the sale of the manufactured rubber is Rs 18,00,000. What is the agricultural income portion of this profit?
The agricultural income portion is Rs 11,70,000. For rubber grown and manufactured by the seller, 35% of the profit is treated as business income and the other 65% as agricultural income. Sixty-five per cent of Rs 18,00,000 equals Rs 11,70,000.
- ARs 6,30,000
- BRs 7,20,000
- CRs 10,80,000
- DRs 11,70,000Correct
Explanation
For rubber grown and manufactured by the seller, 35% of the profit is business income and 65% is agricultural income. Agricultural income = 65% x 18,00,000 = Rs 11,70,000. Rs 6,30,000 is the business portion (35%).
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