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of <h1>ITAT classifies mushroom income as agricultural; directs verification of income amount. Decision on 26th July 2018.</h1> <h3>Himalaya International ltd. Versus Pr. CIT-4, New Delhi</h3> Himalaya International ltd. Versus Pr. CIT-4, New Delhi - TMI Issues:1. Whether income from growing mushroom can be considered agricultural income.2. Whether the Assessing Officer failed to verify the quantum of income from growing mushroom.Analysis:Issue 1:The appeal arose from an order by the CIT deeming the assessment order as erroneous and prejudicial to the interest of the Revenue due to the acceptance of exempt income from growing mushrooms as agricultural income. The ITAT Delhi noted that the Hyderabad Special Bench had ruled that income from the production and sale of mushrooms could be considered agricultural income. As there was a divergence of opinion on this issue at the time of the CIT's order, the ITAT held that the CIT was not justified in rejecting the Assessing Officer's stand on the matter. The ITAT set aside the CIT's order on this aspect.Issue 2:Regarding the verification of the quantum of income from growing mushrooms, the ITAT found that the assessment order lacked any discussion or inquiry on this aspect. The CIT highlighted various points related to the quantification of income from mushrooms that were not considered by the Assessing Officer. The ITAT referred to Explanation 2 to section 263, which states that an order is erroneous if inquiries or verifications were not made. As the Assessing Officer did not examine the quantification of the income claimed as exempt, the ITAT upheld the CIT's direction to verify the quantum of income from growing mushrooms. The ITAT concluded that while the CIT was not justified in invoking section 263 on the agricultural income aspect, the direction to verify the income quantum was appropriate.In summary, the ITAT partially allowed the appeal, holding that the income from growing mushrooms should be considered agricultural income but upheld the CIT's direction to verify the quantum of income from growing mushrooms. The decision was pronounced on 26th July 2018.
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