AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (2) TMI 49
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....e interests of revenue, for the reason that the AO while passing the order u/s 143(3) allowed the agricultural relief u/s 10(1) without making inquiries or verification, which should have been made in respect of the claim of agricultural relief allowable u/s 10(1) of the Act. Accordingly, a notice u/s 263 of the Act issued to the assessee. 4. In response to the said notice, the assessee filed written submissions on 20/01/2017, in which, it was contended that the nature of activity carried out by the assessee company, the operation constituting the agricultural activity, the role of the assessee etc., had been explained before the AO. 4.1 The assessee referred to the decision of the Hon'ble High Court of AP in the case of Prabhat Agri Biotech Ltd., a group company to submit that the activities of the assessee were exactly similar to the said company. 4.2 The assessee further submitted that since the AO had examined the information submitted and come to a conclusion that the income from sale of hybrid seeds was not taxable in view of the said judicial pronouncement, and, therefore, the order passed by him was not erroneous and prejudicial to the interests of revenue. 5. After con....
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....re or at the time of hearing of the appeal, if it is considered necessary." 7. The ld. AR of the assessee reiterated the submissions as made before the revenue authorities and filed written submissions before us, which were submitted before the revenue authorities in the paper book. 8. Ld. DR, on the other hand, filed synopsis of arguments, in which, he relied on various cases and referring to the Explanation 2 to section 263(1) (inserted with effect from 01/06/2015), submitted that if in the opinion of the Principal CIT, any order passed without making inquiries or verification or passed allowing relief without enquiring into the claim shall be deemed to be erroneous in so far as it is prejudicial to the interests of revenue. He, therefore, submitted that in the instant, case, there was a valid opinion formed by the Pr. CIT that the exemption u/s 10(1) was granted without enquiry, hence, the revision u/s 263 is a valid revision. 9. Considered the rival submissions and perused the material on record. As submitted before the AO as well as before the CIT by the assessee, the activities undertaken by the assessee in growing and production of seeds are as under: i) Selection of fi....
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.... be agricultural income. 9.4 Applying the above principles, it can be construed that the processing carried on by the Company is ordinary process 'employed by the cultivator to be fit for marketing, for the following reasons: > The processes carried on ;by the Company are much normal process carried on by a cultivator and as required oy a statute i.e., The Seeds Act, 1966 . > The products remain the same even after processing where we remove unfilled seeds and foreign matter. > The seeds remain as seeds remain after processing. > It retains its nature and character as seeds as produced on plants in field. > No new product has evolved or emerged from the seeds on account of the processing. Therefore, the operations carried out by the Processing Division of the Company falls within sub-clause (ii) of clause (b) of section 2(1A) of the Income-tax Act, 1961. 9.5 In view of the foregoing, since the activities carried on by the company was in the nature of agricultural activities and the income arising there from falls within the ambit of "agricultural income", the company is eligible for claim of exemption under section 10(1) of the Income-tax Act, 1961. 9.6 The assess....
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.... adjudication of the issue, but also should point out as to how the view arrived at by the A.O by not taking recourse to such inquiries and verification, can be faulted with and held to be wrong. We thus are of the considered view that now when the assessee had in the course of proceedings before the A.O proved that the foreign commission was paid to the foreign commission agents for services rendered abroad, which thus did not cast any obligation on the assessee to withhold tax while making such payment, therefore, the observation of the Principal CIT that the assessee had neither submitted an order under Sec. 195 of the Act, nor the prescribed certificate in Form No. 15CA of the Chartered Accountant, specifying that the deduction at source on such commission paid was not required to be made, in itself is rendered as redundant. Thus, in the absence of any statutory obligation on the assessee for withholding tax on the aforesaid payment, neither of the aforesaid verifications as were sought by the Principal CIT did survive any more. We are of the considered view that the Principal CIT in the backdrop of the aforesaid facts as emerges from the record, and was also pleaded by the ass....
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....in respect of the issue of payment of commission to Sh. Pratap singh cannot be sustained and is liable to be vacated. We thus in the backdrop of our aforesaid observations are of the considered view that now when the A.O after making necessary inquiries and verifications which should have been made by him in the course of the assessment proceedings and the queries raised vide notice under Sec. 133(6), had arrived at a plausible view, which we are afraid the Principal CIT had not been able to show as to how the same was erroneous, nor as to what all inquiries and verification leading to a contrary view should have been made by him, therefore, are unable to persuade ourselves to be in agreement with the Principal CIT that the order passed by the A.O under Sec. 143(3) was erroneous in so far it was prejudicial to the interest of the revenue, therein rendering it liable to be revised under Sec. 263 of the Act. We may further observe that we are in agreement with the contention of the ld. A.R that merely because the A.O had not referred about the inquiries and verifications carried out by him in respect of the issue under consideration in the body of assessment order, the same would not....