Agricultural income exemption for tissue culture and floriculture upheld for nursery-grown plants under the Income-tax Act.

Income derived from the sale of flowering plants produced through tissue culture and floriculture operations was treated as agricultural income eligible for exemption under section 10(1) of the Income-tax Act, 1961. The Tribunal followed earlier decisions in the assessee's own case, holding that nursery and greenhouse activities, including development from mother plants and subsequent nurturing, constituted agricultural operations. It also relied on the statutory deeming provision for saplings or seedlings grown in a nursery as agricultural income. In the absence of any distinguishing facts or contrary higher-court ruling, the rule of consistency was applied and the Revenue's challenge failed.

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Issues: Whether income derived from the sale of flowering plants developed through tissue culture and floriculture operations constituted agricultural income exempt under section 10(1) of the Income-tax Act, 1961.

Analysis: The issue was treated as covered by earlier decisions in the assessee's own case. The Tribunal followed its prior rulings holding that the operations carried out in the nursery and greenhouse, including the development of plants from mother plants and the subsequent nurturing process, amounted to agricultural operations. It also noted that the statutory amendment deeming income from saplings or seedlings grown in a nursery as agricultural income supported the assessee's case. In the absence of any distinguishing feature or contrary higher-court decision, the rule of consistency was applied.

Conclusion: The income from floriculture and tissue culture was held to be agricultural income and entitled to exemption under section 10(1); the Revenue's challenge failed.

Ratio Decidendi: Income derived from plant floriculture and tissue culture operations, where the produce is generated through agricultural activity in a nursery or greenhouse, is agricultural income for purposes of exemption under section 10(1) of the Income-tax Act, 1961.

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