TaxTMI 
TaxTMI 
2011 (2) TMI 241
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....unsel for the appellant, has made available two copies of paper-books of each appeal to the Court for reconstruction of the files. The said copies are taken on record and the paper books of the appeals are treated as having been reconstructed. For purpose of disposal, facts have been taken from Income Tax Appeal No. 396 of 2005. 3. This appeal under Section 260A of the Income-Tax Act, 1961 (for short "the Act") has been filed by the assessee against the order dated 23.3.2005, passed by the Income Tax Appellate Tribunal Chandigarh Bench 'B' Chandigarh (in short "the Tribunal") in ITA Nos. 303 and 536/CHANDI/2000, relating to the assessment year 1997-98. 4. The following substantial questions of law have been claimed, in Income Tax Appeal No. 396 of 2005 which are common in all the appeals for determination by this Court: " i) Whether the processing of raw peas into pea seeds is a process ordinarily employed by the cultivator within the meaning of Section 2(1-A)(b)(ii) or 2(1A)(b)(iii) in spite of the admission of the assessee in his statement on oath dated 28.2.2000 that there was Hindustan Lever Canning Plant which provides ready market for raw peas? &....
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....ral income at Rs. 74,73,041/-, bringing it to the ambit of tax. The assessment was, thus, completed at total income of Rs.75,21,041/-, vide order dated 29.3.2000. 7. In the appeal filed by the assessee before the Commissioner of Income Tax (Appeals) [for short "the CIT(A)"] the action of the assessing officer was confirmed vide order dated 14.3.2001. The CIT(A), however, restricted the non agricultural income to the extent of 30%, i.e. at Rs.27,83,255/-, and held that the remaining 70% income formed part of agricultural income. It was observed that the raw peas were to undergo the process of producing pea seeds and quantity of the resultant product so procured would be less in weight due to drying in the said process. 8. Feeling not satisfied with the order of the CIT(A) both, the assessee and the Revenue preferred separate appeals before the Tribunal. The Tribunal vide the order under appeal dismissed the appeal of the Revenue and accepted that of the assessee. It was observed in plain terms that the conversion of raw seeds into pea seeds could not be held as non agricultural as the raw seeds were a highly perishable item that might result in prospective loss i....
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....erations and would require the expenditure of human skill and labour upon the land itself. There are, however, other operations which have got to be resorted to by the agriculturist and which are absolutely necessary for the purpose of effectively raising the produce from the land. They are operations to be performed after the produce sprouts from the land, e.g., weeding, digging the soil around the growth, removal of undesirable undergrowths, and all operations which foster the growth and preserve the same not only from insects and pests but also from depredation from outside, tending, pruning, cutting, harvesting and rendering the produce fit for the market. The latter would all be agricultural operations when taken in conjunction with the basic operations above described, and it would be futile to urge that they are not agricultural operations at all. But even though these subsequent operations may be assimilated to agricultural operations, when they are in conjunction with these basic operations could it be said that even though they are divorced from these basic operations they would nevertheless enjoy the characteristics of agricultural operations? Can one eliminate these bas....
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.... assessee has claimed that the same has been made only keeping in view the fact that there was no ready market for sale of huge quantity of raw seeds produced by him and since raw seeds was a perishable item it was processed into pea seeds keeping in view the ready market as well as time of perishing of such pea seeds, on the other hand. The revenue has basically disputed such processing of raw seeds on the ground that no such activity was undertaken on the land itself to enable the assessee to claim the same as agricultural income, whereas in the case of Sudisha Farm Nursery (supra), relied upon by the assessee, the Delhi Bench has held that all the operations are not necessarily carried out on the land itself. The case of Soundarya Nursery (supra), relied upon by the assessee also supports the plea of the assessee which says that it is not possible for the peas to exist without the mother plants, hence the same has to be treated as agricultural income. We also find that the Hon'ble Supreme Court in the case of Raja Benoy Kumar Sahas Roy (supra) has held that integrated activity which constitutes agricultural is undertaken and performed in regard to any land that land can be said ....
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.... partly agricultural and partly non-agricultural. The AO has further observed that the assessee in this case has failed on two tests as laid down u/s 2(1A) (B)(ii):- i) The process employed by the assessee in converting raw peas into pea seeds is not ordinarily employed by a cultivator; and ii) It is not employed to render the produce the peas raised by the assessee if to be taken to market. We, however, from perusal of different process of converting raw peas into pea seeds employed by the assessee, find that he has not employed any substantial technique or mechanism to convert raw peas into pea seeds and such conversion of raw peas into pea seeds has only been made keeping in view the fact that there was no ready market available for sale of raw peas and raw peas being perishable item was converted into pea seeds by just uprooting the plaint as a whole and then by simply drying, thrashing and winnowing such uprooted pea plant converted into pea seed for which ready market was available and such pea seeds have a comparable long life than raw peas. Before coming to any conclusion, we find it pertinent to mention here below the definition of 'agricul....
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.... of raw peas into pea seeds had only been done keeping in view that there was no market readily available for sale of raw peas. It is further clear from the above observations that the raw peas being perishable item was converted into pea seeds by just uprooting the plant as a whole and then by drying, thrashing and winnowing such uprooted pea plant for which ready market was available. In view of these observations, it was held that the assessee was carrying on agricultural activities and the income derived from that was his agricultural income. The findings recorded by the Tribunal noticed above deleting the addition sustained by the CIT(A), have not been shown to be perverse. After considering the matter in entirety and applying the principles laid down in Raja Benoy Kumar Sahas Roy's case (supra), we are of the opinion that the income derived by the assessee from the pea seeds was agricultural income and, thus, not exigible to tax. 17. Referring to the judgments relied upon by the learned counsel for the Revenue, suffice it to notice that the same were based on individual fact situation involved therein and are of no assistance to the revenue. 18. Accordingl....