TaxTMI 
TaxTMI 
2016 (5) TMI 956
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....ainst deletion of addition of Rs. 17,84,37,105/- by the CIT (A). 2. Facts apropos are that assessee engaged in the business of floriculture, ISP services, Project services and software development, had filed its return of income declaring income for the impugned year at nil after claiming exemption for agricultural income of Rs. 10,71,09,148/-. During the course of the assessment proceedings assessee was required to explain the claim with regard to the agricultural income. As per the assessee, its total agricultural income arose out of the sale of mother plants and other floriculture items. The sales claimed by the assessee consisted of the following : Domestic sales Rs. 1,79,33,098/- Export sales to subsidiary Rs.22,74,57,820/- Exp....
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....would enable the bank to authorise receipt of the export proceeds, arising out of supplementary invoice. AO also noted that despite several opportunities being given, assessee had not substantiated its claim of agricultural income arising out of the supplementary invoices. Further as per the AO against the purported horticulture sale of Rs. 22,74,57,819/-, what was actually received from the subsidiary was only Rs. 3,62,72,680/-. Sum of Rs. 12 crores was squared up vide a journal entry dt.30.01.2006 transferring such sum to a head called "Advance to Ehiopian Meadows Plc". Balance shown as receivable from the subsidiary at the end of year was Rs. 7,11,85,138/-. Thus as per the AO against the claimed sale of Rs. 22,74,57,826/-, to the subsidi....
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....as appreciative of the above contentions. According to him, claim of the assessee that first invoice was at a notional value and the second invoice was raised based on ultimate realisation was an acceptable one. As per the Ld. CIT (A), this was a general practice followed in floriculture exports. Further as per the CIT (A) once there was an export of agricultural produce and realisation, exemption claimed for agricultural income could not be denied for non adherence to procedures and minor errors in documentation. He accepted the contention of the assessee that agricultural income arising out of the sales whether in India or outside India was eligible for exemption. He deleted the addition made by the AO. 8. Now before us, Ld. DR strongly ....
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....han 9,00,000 plants/saplings supplied to M/s Ethiopian Meadows. Thus as per the Ld. DR, assessee had inflated its claim of agricultural income. Again as per the Ld. DR if the claim of the assessee was that balance of the seedlings were purchased in the open market and sold, then income therefrom would not be agricultural income. 9. Per contra, Ld. AR submitted that AO himself had stated that assessee was not doing any trading. As per the Ld. AR, Ethiopian Meadows, a subsidiary of the assessee was selling the plants and saplings in the Dutch Auction house and the actual realisation would be known only on the auction floor. As per the Ld. AR at the time of sending the saplings to the subsidiary, a notional amount was shown in the invoice sin....
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....f the assessee is that it had sold more than 9,00,000 mother plants to its subsidiary in Ethiopia from the above holding. As per the Department, assessee could not have raised more than 3,30,000 plant saplings from the above holding. 11. Leaving this apart, what we find is that assessee had along with its return filed audit report in form 3 CEB which is required to be furnished u/s.92 E for international transactions with AEs. AO had compiled the figures given at para three above from such report. It is clear from the said report that against the claimed sale of Rs. 22,74,57,819/-, ALP was only Rs. 4,20,20,714/-. This is not the opinion of the AO / TPO, but it is the opinion of the auditors of the assessee. What the AO did was to accept th....
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....and whether it falls within the definition of that term given in Section 2(1A). When an assessee asserts that the income raised by it is on account of sale of agricultural produces, onus is on the assessee to prove such agricultural income. In our opinion, assessee before us has failed to discharge this onus. Despite number of opportunities given by the AO assessee was unable to establish how it could raise so much plants and saplings from five hectares of green house area. 13. As for the claim of the Ld. AR that even if the agricultural income is found to be incorrect, it would not warrant addition since there was no real income, we are afraid we cannot accept. This for the reason that a sum of Rs. 12 crores out of the dues shown by the a....