Agricultural income treatment for floriculture and nursery operations upheld; greenhouse methods did not alter the income's character.

Income from floriculture, tissue culture and nursery operations was treated as agricultural income because the activities involved agricultural operations on plants grown from a mother plant, with human skill and labour applied to basic and subsequent processes. The use of greenhouse or scientific methods did not change the agricultural character of the activity, and saplings or seedlings grown in a nursery were also covered by the explanatory amendment to the definition of agricultural income. The income was therefore excluded from total income under section 10(1), and the Revenue's challenge failed.

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Issues: Whether income derived from floriculture, tissue culture and nursery activities was agricultural income eligible for exclusion under section 10(1) of the Income-tax Act, 1961.

Analysis: The activities were held to involve agricultural operations where the primary source of the plants was the mother plant reared on earth and human skill and labour were applied to basic and subsequent operations. The use of greenhouse or scientific methods did not alter the character of the operations, and the products remained agricultural in nature. Support was also drawn from the explanatory amendment inserting Explanation 3 to section 2(1A), which deemed income from saplings or seedlings grown in a nursery as agricultural income.

Conclusion: The income from the assessee's floriculture, tissue culture and nursery activities was agricultural income under section 2(1A)(b)(i) and was to be excluded from total income under section 10(1); the Revenue's challenge failed.

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