TaxTMI 
TaxTMI 
2018 (1) TMI 658
X X X X Extracts X X X X
X X X X Extracts X X X X
....e personnel from the assessee company appeared and produced the information called for. 3. The AO examined the nature of the agricultural activities carried on by the assessee. Before the AO, the assessee had submitted that in the year 2010, the assessee participated in the global tender for the relaying of the stadium with turf grass for Common Wealth Games, New Delhi 2010 with the support of M/s. Strayth Ayr - an Australian Co, and provided extensive presentation of the technology proposed to be used and also delivered samples etc., and that the assessee was awarded the work on its merits. It was submitted that the job involved growing and laying of turf grass as per the international sporting standards at the main stadium, i.e. Jawaharlal Nehru Stadium and the work of laying had to be accomplished within a period of 24 hours of the closure of the opening ceremony and had to be ready for use. It was submitted that in order to execute the contract, the assessee leased some land near Delhi and grew the specified grass turf forage in accordance with the requirements of the contract and the entire growing process lasted about 130-135 days under the inspection of CWG officials from....
X X X X Extracts X X X X
X X X X Extracts X X X X
....act entered into by the assessee with CWG Committee, New Delhi for laying the grass turf in JLN stadium. After considering these contentions, the AO held that the activity up to the level of growing grass, (including specialized grass) fits into the activity of agriculture, but the subsequent operations are definitely not in continuation of the earlier basic activity of agriculture but are specialized activity with usage of imported machinery and deployment of foreign technical personnel. He therefore, held that the activity of agriculture ended in this case with growing of the turf grass in leased lands under the conditioned environment, but the other activities carried out by the assessee are only to meet the conditions of the contractor to make this basic agricultural produce fit to be used for conducting track and field events. Therefore, he treated the entire activity as one integrated activity and not as agricultural activity. 6. The AO also observed that the assessee company rendered its services to many other software companies, private individuals and other sports committees in preparing green lawns, football ground etc., and all the activities were carried out with the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d vs. CIT reported in (1997) 93 Taxman 579 (S.C) 10. Having regard to the rival contentions and the material on record, the undisputed facts of the case are that the assessee company is engaged in agricultural activity and related consultancy. It participated in the bidding for the Contract for Replacement of Grass Turf with Live Rolling Grass on Field of Play at Jawaharlal Nehru Stadium for Athletic Track and Field Event for Commonwealth Games, New Delhi, 2010. The assessee was awarded the contract and in the said contract, the assessee is described as a service provider. Let us, therefore, examine the nature of the work awarded to the assessee. The relevant clauses to understand the nature of the work are discussed as under: (i) The services required to be performed by the service provider are set out in schedule-2 of the contract. (ii) As per clause 4.2 of the contract, the service provider must; (a) Grow the Grass Turf in accordance with the terms of the Contract; (b) Deliver the grass turf at the Games venue Jawaharlal Nehru Stadium, New Delhi in a manner essential for executing this job on the date specified by Delhi 2010 to the Service ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment date (21st June, 2010) 2. When the ground is prepared for grassing including the grassing with seed/ sod of specified grass stain Within 60 days from the commencement date (21st July,2010) 3. To check if the grass is fully grown and is lush green and at least 3 to 4 moving are carried out Within 90 days from the commencement date (21st August, 2010) 4 To check if the rolls/grass are ready and are lush green and are in proper state and fit for use Within 120 days from the commencement date (21st September, 2010)" (xiii). Schedule 3 prescribes the schedule of the fees and payments and Table-1 thereunder gives the following details. "1. In consideration of the satisfactory provision of the Services (which will be determined by doing periodic checks, Delhi 2010 will pay to the Service Provider's nominated account a total of Rs. 7,25,88,333/- (Rupees Seven Crores Twenty Five Lacs Eighty Eight Thousan d Three Hundred and Thirty Three only) (inclusive of all existing Taxes) as, fees in INR in the following instalments: "S.No Amount Task 01 10% of the total amount of the contract Within 15 days of submission of the perform....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is agricultural activity? and (b) if not, can the activity be bifurcated into agricultural and non-agricultural activities and if the answer to (b) is yes, then up to what stage is it agricultural activity?. 12. According to the assessee, it has been awarded the contract of growing the grass and delivering it in the prescribed condition at the venue of the contract. Therefore, the entire activity is one single activity where the assessee is required to supply the agricultural produce in a particular condition and the operations subsequent to the harvest and up to the delivery of the goods to the customer is also part of the agricultural activity. In support of his contention, the learned Counsel for the assessee has placed reliance upon various decisions which have been listed above. No doubt, the assessee has been awarded the contract to provide the service of relaying the grass turf in the Jawaharlal Nehru Stadium for the Commonwealth Games to be held at New Delhi in 2010 and as far as CWG is concerned, it is a contract for service and the payments are not towards salary or wages. Therefore, it made TDS from the payment. This factor alone does not determine the nature of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or use of the same in growing of the grass. It appears that the mesh is used to hold the grass together as it is to be used for field and athletic events and the grass does not get damaged. The case of the Revenue is that the assessee, though has levelled the land by use of tractors, has not done any further agricultural activity of sowing the seeds etc. The photographs produced by the assessee also do not show the sowing of seeds or the germination of the seeds in the field. In fact, the invoices placed before us in the additional evidence also show that the assessee has purchased as much as 1,65,903 sft. of grass carpet from various suppliers and there is no bill for any purchase of the seeds nor is there any bill for fertilizers and chemicals. It is the case of the learned DR, that the assessee has sourced the grass from various cultivators and has only maintained the grass till it has grown to a particular length before harvesting and laying it in the field. Having gone through the invoices for purchase of the grass carpet, which has been purchased from 10.07.2010 to 23.09.2010 from various parties, we find that the grass carpet of nearly 90,000 sft was supposed to be relayed i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... field, and if the term is understood only in that sense agriculture would be restricted only to cultivation of the land in the strict sense of the term meaning thereby, tilling of the land, sowing of the seeds, planting and similar operations on the land. They would be the basic operations 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, i.e., 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. However, the mere performance of these subs....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the land. The use of the word agriculture in regard to such activities would certainly be a distortion of the term. It the term 'agriculture' is understood as comprising within its scope the basic as well as subsequent operations in the process of agriculture and the raising on the lands of products which have some utility either for consumption for trade and commerce, it will be seen that the term 'agriculture' receives a wider interpretation both in regard to its operations as well as the results of the same. Nevertheless there is present all throughout the basic idea that there must be at the bottom of its cultivation of land in the sense of tilling of the land, sowing of the seeds, planting, and similar work done on the land itself. This basic conception is the essential sine qua non of any operation performed on the land constituting agricultural operation. If the basic operations are there, the rest of the operations found themselves upon the same. But if these basic operations are wanting the subsequent operations do not acquire the characteristic of agricultural operations". 14. Subsequent to this decision of the Hon'ble Supreme Cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....held as under: "It was not in dispute that the land in question is an agricultural land and it belonged to agriculturists. Vide lease agreement, it was also verified that the land in question happened to be holding the character of agricultural land. The revenue has not disputed these facts but raised objection primarily in respect of the operation carried out by the assessee". .................... " Considering the advancement of technology and the use of the advanced equipment in cultivation coupled with the conventional cultivation method put together, it has to be held that the operation carried out by the assessee was agricultural operation in nature. Therefore, the income in question was an agricultural income. It cannot be included in total income being within the ambits of the provisions of section 10(1)". 17. In the case of Asstt. CIT vs. P.Z. Estates (P) Ltd, reported in (2005) 2 SOT 563 (Del.) the Tribunal was considering the nature of the income derived by the assessee therein from growing special quality of grass required for creating golf course and has held it to be agricultural income. 18. In the decisions relied upon by the learned ....