TaxTMI 
TaxTMI 
2017 (8) TMI 445
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....05.2014 (in appeal No.PN/CIT(A)-I/ITO Wd.11(3)/Pn/47/2013-14) granted substantial relief to assessee. Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us and has raised the following grounds : "1. The Ld. Commissioner of Income Tax (Appeals) grossly erred in directing the Assessing Officer to treat the assessee's income as agricultural income u/s 2(1A)(b)(i) of the Income Tax Act, 1961 and to exclude the said income u/s 10(1) of the Income Tax Act,1961. 2. The Ld. Commissioner of Income Tax ( Appeals) erred in ignoring the facts that there is no basic place in a green house and tissue culture laboratory which cannot be termed as land or nursery for growing plants. 3. The Ld. Commissioner of Income Tax (Appeals) grossly erred in ignoring the facts that sale of the assessee consisted mainly of flowering plants developed out of imported mother plants in a tissue culture laboratory and not grown in a nursery. 4. For the facts and such other reasons as may be urged at the time of hearing, the order of Ld. Commissioner of Income Tax-(Appeals) may be vacated and that of the Assessing Officer be restored." 3. Before us, at the out....
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....ent year under appeal. Ground No. 1 and 2 of appeal are allowed." Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us. 5. Before us, Ld.D.R. supported the order of AO. Ld.A.R. on the other hand, reiterated the submissions made before AO and Ld. CIT(A) and further submitted that AO while deciding the issue against assessee AO had mainly followed the reasoning of the AO for A.Y. 2004-05. He submitted that when the matter for A.Y. 2004-05 was carried before Tribunal, the Hon'ble Tribunal decided the issue in favour of the assessee. He further submitted that in A.Y. 2009-10, the Co-ordinate Bench of the Tribunal, following the order in assessee's own case for A.Y. 2007-08 had decided the issue in favour of the assessee. He pointed to the relevant findings of the order that are placed in paper book. He therefore submitted that in such circumstances the order of Ld. CIT(A) needs to be upheld. He thus supported the order of Ld. CIT(A). 6. We have heard the rival submissions and perused the material on record. The issue in the present case is whether the income derived from the business of plant floriculture / tissue culture is exempt u/s 10(1) of the Act. We ....
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....tural income. 34. We would also like to deal with Hon'ble Madras High Court's judgment in the case of CIT Vs. Soundarya Nursery (supra) at this stage. As far as the facts of the case were concerned, Their Lordships, inter alia, noted as follows: The Tribunal, after considering all the relevant facts, as also the applicable law, concluded that the assessee's activities are to prepare seedlings on scientific lines: that the other plants are grown on prepared beds on lands owned by it and the plants are then grafted or budded ; that' the resulting grafts are transplanted in suitable containers and are reared in green houses or in shade and after they take root, they are transmitted to large containers filed with top soil and manure, etc, till they establish themselves; and thereafter those plants are sold and that the primary source of the plant is the mother plant, which is reared on earth and for which activities, certainly contribution of human labour and energy are essential. 35. Their Lordships thus clearly noted "the primary source of the plant in the assessee's activities was the mother plant, which is reared on earth and for which certainly contribution....
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....his order, rests on a unsustainable legal foundation. The basic operations have been, and can only be, carried out on the land. The fact that this land is in a greenhouse does not change the character of operations. The distinction was thus wrongly made out by the CIT(A), in our considered view, the principles laid down by the Hon'ble Madras High Court's judgment in the case of Soundaraya Nursery (supra) apply to the facts of the case before us as well. 38. We may also refer to Hon'ble Allahabad High Court judgment in the case of Jugal Kishore Arora Vs DCIT (269 ITR 133). In this case, Their Lordships, after taking note of and analyzing the landmark Supreme Court judgment in the case of Raja Benoy Kumar Sahas Roy (supra), also observed that "the nature of produce raised has no relevance to the character that "the nature of produce raised has no relevance to the character of agricultural operation". It was noted that cultivation of flowers of artistic and decorative value would also be included in the scope of agricultural operations. This observation will also apply to the facts of the present case. 39. We may mention that our attention was also invited to Explana....