What are the tax implications of income from farm house or leasing agricultural land?

Income from farm houses used for personal purposes is treated as agricultural income and exempt under Section 10(1). However, if the farm house is leased out or commercialized, the income will be taxable under the head ‘Income from House Property’ or ‘Profits and Gains from Business’ as applicable. The Supreme Court in Chennai Properties Trust v. CIT (2004) held that leasing of land is taxable as business income unless the letting was temporary and casual. Income from leasing agricultural land for taking a crop share or rent is considered agricultural income if specific conditions are met.