2012 (7) TMI 419 - AT - Income Tax

Tribunal overturns disallowances, recognizes income sources in agricultural appeal.

Smt. Anandhi Akilan, Versus Income Tax Officer,

Smt. Anandhi Akilan, Versus Income Tax Officer, - TMI Issues:1. Disallowance of income from various sources as agricultural income.2. Disallowance of expenditure in poultry farming.3. Disallowance of income from sale of coconuts.4. Disallowance of income from sale of turmeric under agricultural income.Issue 1 - Disallowance of income from various sources as agricultural income:The appellant impugned the order disallowing income from dairy farming, sale of milk & goat, sale of turmeric, and sale of coconut trees as agricultural income. The Assessing Officer categorized income from Emu Birds and sale of milk & goat as business income, and income from turmeric and coconut trees as 'Income from Other Sources.' The appellant contended that expenses towards purchase of birds and maintenance costs were not considered. The Tribunal found that the cost of purchase and maintenance of Emu birds should have been allowed as business expenditure, overturning the Assessing Officer's decision.Issue 2 - Disallowance of expenditure in poultry farming:The appellant challenged the disallowance of expenditure related to poultry farming. The Tribunal observed that the Assessing Officer failed to consider the cost of purchase and maintenance of Emu birds, which were necessary for generating income. Consequently, the Tribunal allowed the appellant's appeal on this ground.Issue 3 - Disallowance of income from sale of coconuts:The Assessing Officer disallowed the income from sale of coconuts as agricultural income, questioning the yield from coconut trees. The Tribunal noted that the appellant had planted coconut trees that started yielding during the relevant assessment year. Despite lack of concrete evidence, the Tribunal considered basic operations involved in growing coconut trees and allowed 50% of the claimed income as agricultural income, emphasizing the need for justice in the decision.Issue 4 - Disallowance of income from sale of turmeric under agricultural income:The Assessing Officer disallowed income from sale of turmeric, citing discrepancies in the timing of sale and harvest. The Tribunal disagreed, emphasizing that farmers often wait for optimal prices before selling produce. Considering the cultivation cycle and the appellant's practices, the Tribunal found the Assessing Officer's addition unjustified and allowed the appeal on this ground.In conclusion, the Tribunal set aside the CIT(A)'s order and partially allowed the appellant's appeal, recognizing the validity of certain income sources as agricultural income and overturning disallowances based on insufficient reasoning.