TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 658
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....red 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 time to time. It was submitted that various ....
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....ee, 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 their in-house knowledge and involved normal agricultu....
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.... 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 Provider as stated and in the manner provided in Schedule 2 of the Contract. (iii). Clause 11 specified the fee for services; (iv) Clause 11.8 provides that payments mad....
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....d 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 performance security or within 15 days of signing on this Contract whichever is later. 02 25% of the total amount of the contract Within 15 days of the surveyor certifying that the work has started. 03 25% of the total amount of contract Within 15 days of the surveyor certifying that the gro....
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.... 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 activity. This is one of the several factors which determine the nature of the activity. The contract involves certain activities which may fall under the category of agricultural activity. As seen from the contract terms & conditions, the contract payment is for the entire activity and is paid in instalments only to ensure that the assessee adheres to the timeframe and....
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....roduced 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 in the fields on 3.10.2010. The assessee's case is that it had to grow large extent of grass in order to meet the requirement of the good and high standard of grass required under the contract and some of the purchases are only to see that the assessee fulfills the conditions even if some of the grass grown by the assessee is damaged by the vagaries of the nature. However,....
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....re 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 subsequent operations on the products of the land, where such products have not been raised on the land by the performance of the basic operations which have been described above would not be enough to characterize them as agricultural operations. In order to invest them with the character of agricultural operations, these subsequent operations must necessarily be in conjunction with and ....
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....e 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 Court, the Hon'ble Madras High Court in the case of CIT vs. Soundarya Nursery reported in (2002) 241 ITR 530 (Mad.) has held as under: " If the plants sold by the assessee in pots were the result of the basic operations on the land on expending human skill and labour thereon and it was only after the performance of the basic operations on the land, the resultant product grown or such part thereof as ....
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....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 DR, we find that the judgment of the Hon'ble Supreme Court in the case of Thiru Arooran Sugars Ltd v. CIT (Supra) is not applicable to the facts of the case before us as it is distinguishable on facts. 19. In the case of CIT v Namdhari Seeds (P) Ltd (Supra), the Hon'ble Karnataka High Court was considering the case whether the hybrid seeds were grown by the farmers which were purchased and sold by the assessee and none of the other activ....