TaxTMI 
TaxTMI 
2014 (8) TMI 1025
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....mption of Rs. 35,33,117/- made u/s 10(1) of the Act. 3. The CIT(A) erred in deleting the disallowance of Rs. 1,77,371/- made u/s 14A of the I.T. Act. 4. The CIT(A) erred in holding that the assessee is eligible for deduction u/s 10(1) though the main activity of the assessee is development of high yielding hybrid seeds through research and development and marketing the products for commercial purpose. 5. The CIT(A) ought to have taken into consideration that section 2(1A) has defined the term agricultural income the reference is to a cultivator whose products is fit to be taken to market without any processing as held by the Hon'ble ITAT, D Bench, Delhi in the case of M/s. Pro Agro Seeds. 2. Ground nos.1 & 6 being general in nat....
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....d proceeded to hold that the amount of Rs. 35,33,117/- representing the sale proceeds of basic seeds cannot be treated as agricultural income, hence, not exempt u/s 10(1) of the Act. The assessing officer also reasoned that as the decision of the ITAT has been challenged before the Hon'ble High Court of A.P., the exemption claimed by the assessee has to be disallowed and accordingly made addition of an amount of Rs. 35,33,117/-, though the assessing officer did observe that the collection of demand in respect of said addition will not be enforced till the issue reaches finality. 4. Being aggrieved of such addition made by the assessing officer, assessee preferred appeal before the CIT(A). 5. The CIT(A) taking into cognizance the fact ....
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.... dated 9.11.2009 for the A.Y. 2005-06, ITA No.528/Hyd/2010 dated 23.9.2010 for the A.Y. 2006-07 and ITA Nos.1214 & 1215/Hyd/2010 dated 13.4.2012 for the A.Ys. 2008-09 & 2009-10. In fact, when the issue was decided in favour of the assessee in ITA Nos.1288 & 1289/Hyd/2012 dated 4.1.2013 by the ITAT the department challenged the same before the Hon'ble High Court. The Hon'ble High Court vide its judgement dated 21.2.2014 in ITA No.88 of 2014 held as under: "We are unable to accept the farfetched idea that artificial production of seeds can be sold or used for commercial purpose. May be a few hybrid seeds could be produced by artificial method in a laboratory. He seeds so produced with non-agricultural activity again will have to be sown in....
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....average investments of Rs. 3,54,74,224/- which worked out to Rs. 1,77,371/-. 11. Being aggrieved of such disallowance, the assessee preferred appeal before the CIT(A). 12. The CIT(A) after considering the submissions of the assessee in the light of facts and materials placed before him noted that the assessee was having share capital of Rs. 2,26,44,000/- as on 31.3.2009 and 31.3.2010. Similarly, the assessee was having reserves and surplus of Rs. 4,79,06,873/- as on 31.3.2010 and Rs. 4,22,88,547/- as on 31.3.2009. Therefore, the assessee was having a total amount of Rs. 7,05,50,873/- under the heads "Share capital & Reserve and Surplus on 31.3.2010 and amount of Rs. 6,49,32,547/- as on 31.3.2009, out of which the assessee had invested....
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.... by an assessee in relation to income which does not form part of the total income. Sub-section-2 of the aforesaid amended provision provides that if the assessing officer is not satisfied with the correctness of the claim of the assessee in respect of such expenditure incurred in relation to earning of exempt income, then he can compute the disallowance of such expenditure as per the method prescribed. Sub-section 3 of the section 14A of the Act empowers the assessing officer to disallow expenditure fictionally even if the assessee claims that no expenditure has been claimed by him in relation to income which does not form part of the total income. Rule 8D inserted into the Statute with effect from 24/03/2008 lays down the mode and manner ....