Rule 270 lets the market value of agricultural produce raised by the assessee or received as rent in kind be deducted from business income where the produce was used as raw material in the business or its sale receipts are in the business accounts, with market value defined by average selling price or by cost plus a reasonable profit.
270
Rules 2026 · Rule 270
Determination of income, being partly from agricultural and partly from business
Rules 261-310
The deduction (sub-rules 1 and 2). Where income is partly agricultural and partly from business, the market value of agricultural produce raised by the assessee, or received as rent in kind, is allowed as a deduction where (a) the produce is used as raw material in the business, or (b) its sale receipts are included in the accounts of the business. No further deduction is made for expenditure incurred as a cultivator or receiver of rent in kind.
Market value (sub-rule 3). Where the produce is ordinarily sold in the market in its raw state, or after a process a cultivator or receiver of rent in kind ordinarily applies to make it fit to take to market, the value is calculated at the average price at which it was so sold during the relevant tax year. Where it is not ordinarily so sold, the market value is the total of the expenses of cultivation, the land revenue or rent paid for the area where it was grown, and an amount the Assessing Officer finds to represent a reasonable profit having regard to all the circumstances.