Section 139 of the Income-tax Act, 1961 - Return of income - Clarification regarding filing of return of income by coffee growers, being individuals covered by rule 7B of the Income-tax Rules, 1962
Circular No. 10/2003 was issued by the Central Board of Direct Taxes on 24 December 2003. Its subject is Section 139 of the Income-tax Act, 1961 - Return of income - Clarification regarding filing of return of income by coffee growers, being individuals covered by rule 7B of the Income-tax Rules, 1962.
This amends the Income-tax Rules. What it changes is the Rules, not the Act — and a rule can never take away what the section gives.
Relieves individual coffee growers of the obligation to file a return where their coffee income falls below stated figures, because rule 7B taxes only part of it. An individual growing and curing coffee, with or without mixing chicory or other flavouring ingredients, need not file a return if that income is Rs. 2 lakh or less, since only 25 per cent of it is business income under rule 7B(1). An individual growing, curing, roasting and grinding coffee need not file if that income is Rs. 1,25,000 or less, since only 40 per cent is business income under rule 7B(2). Both reliefs apply only to an individual not covered by the first proviso to section 139(1).
Representations were received from individual coffee growers, and the Board considered the matter to give them relief; under section 139(1)(b) an individual had to file only if total income exceeded the taxable limit, then Rs. 50,000.
Section 139 of the Income-tax Act, 1961 - Return of income - Clarification regarding filing of return of income by coffee growers, being individuals covered by rule 7B of the Income-tax Rules, 1962
1. The existing provisions of rule 7B of the Income-tax Rules, 1962 inserted by the Income-tax (Second Amendment) Rules, 2001, w.e.f. 1-4-2002 and further amended by the IT (Third Amendment) Rules, 2002 w.e.f. 1-4-2003, provide that income derived from the sale of coffee grown and cured by the seller shall be computed as if it were income derived from business and 25% of such income shall be deemed to be income liable to tax.
2. Under the existing provisions of section 139(1)(b) of the Income-tax Act, 1961, an individual is required to file return of income only if his total income is above the taxable limit, i.e., above Rs. 50,000, subject to first proviso to section 139(1) of the Income-tax Act, 1961.
3. In order to provide relief to the individual coffee growers and on representations received from them, the Board have considered the matter of filing return of income by the coffee growers. It is clarified that an individual deriving income from growing and curing coffee, with or without mixing chicory or other flavouring ingredients, and not covered by the first proviso to section 139(1) of the Income-tax Act, 1961, would not be obliged to file his return, if his income from growing and curing of coffee is Rs. 2 lakh or less as only 25% of such income is taxable as business income under rule 7B(1) of the Income-tax Rules, 1962. Where such individual, not covered by the first proviso to section 139(1), derives income from growing, curing, roasting and grounding, with or without mixing chicory or other flavouring ingredients and his income from such activity is Rs. 1,25,000 or less, he would not be obliged to file his return of income as only 40% of such income is taxable as business income under rule 7B(2) of the Income-tax Rules, 1962.
Circular : No. 10/2003, dated 24-12-2003.
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A notice under section 142(1) or 148 asking a small coffee grower why no return was filed for an early 2000s assessment year.
A grower who only grows and cures coffee earns Rs. 1,80,000 from it in the year. Only 25 per cent, Rs. 45,000, is taxable business income under rule 7B(1), which is below the then taxable limit, so on the Board's clarification no return was called for.
Rules it names. Rule 7B of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.
Source: the Income Tax Department’s own published text — its page for this instrument.
