Q.A grower in Coorg grows coffee and sells it after curing only (no roasting or grinding is carried out). The composite income from this activity for the previous year 2025-26 is ₹4,00,000. Determine the agricultural and business portions of this income for AY 2026-27, citing the applicable Rule.

Coffee that is only grown and cured falls under a different, more agriculture-favourable split than fully-processed coffee.

Growing-and-curing-only coffee is split 75% agricultural / 25% business.

Since the grower only grows and cures the coffee — with no roasting or grinding — Rule 7B(1) of the Income-tax Rules, 1962 applies, fixing the split at 75% agricultural (exempt) and 25% business (taxable).

Agricultural income (exempt) = 75% × ₹4,00,000 = ₹3,00,000

Business income (taxable) = 25% × ₹4,00,000 = ₹1,00,000

Only the ₹1,00,000 business portion is chargeable to tax for AY 2026-27; the ₹3,00,000 agricultural portion is exempt under Section 10(1).

Applying the roasted-and-ground coffee split (Rule 7B(1A), 60:40) to a grower who has only cured the coffee — the applicable Rule depends specifically on how much processing was actually carried out; growing-and-curing-only coffee is more favourably split (75:25) than fully-processed coffee (60:40).