TaxTMI 
TaxTMI 
2019 (10) TMI 1117
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....for the Assessment Year 2015-16. 2. The short point involved in this particular case is this as to whether a firm is entitled to exemption on agricultural income particularly when the firm is not the owner of such agricultural land but the partners. 3. The brief facts leading to this case is this that the assessee firm filed its return of income on 08.01.2016 declaring total income of Rs.NIL/- for A.Y. 2015-16, which was processed u/s 143(1) of the Act. At the same time the assessee has shown exempt income from agriculture to the tune of Rs. 39,80,792/-. The agriculture sales of Rs. 52,26,355/- and purchase and other expenses of Rs. 12,45,563/- is also reflected from the details submitted by the assessee, though the assessee firm is not o....
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....ed Assessing Officer made an observation that no agreement between the firm and land owners indicating such activity has been submitted by the assessee firm, neither, the firm was paying any rent to the land owners and hence as per definition of section 2(1A) of the Act, the firm was not entitled to such exempt agricultural income. In appeal, the same was confirmed by the Learned CIT(A). Hence, the appeal before us. 4. At the time of hearing of the instant appeal, the Learned Counsel appearing for the assessee submitted before us that the ownership of land was not a prerequisite for having agricultural income and it would suffice if revenue is derived from agricultural activities carried out on an agricultural land situated in India. If th....
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..... It is only the receiver of rent-in-kind who can directly be held to be the owner of land as referred to in this section. Further that a cultivator may be the owner but it is not necessary that he has to be the owner. In terms of Clause (a) there can be a recipient of rent from land which implies ownership and also a recipient of revenue derived from land, which implies that the person can be the owner or may not be the owner of land. Sub Clause (1) of Clause (b) speaks of income derived from an agricultural land by agricultural activity. Thus revenue derived from land or from agriculture implies a periodic return of income from agricultural operations only. The identical issue has been considered by the Pune Bench in the matter of ITO-vs....
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....can be the owner or may not be the owner of land. Similarly, sub-clause (i) of clause (b) speaks of income derived from an agricultural land by agriculture. This makes it clear that revenue derived from land or from agriculture implies a periodic return of income from agricultural operations only. As per Explanation VI to section 60(1) of the Civil Procedure Code, 1908 includes all such persons who can cultivate land by his own labour or by labour of members of his family or by servants or by labourers by wages payable in cash or in kind as an agriculturist. 18. Hence the terms 'cultivator' or 'receiver of rent-in-kind' could be inferred to be a person who cultivates the land either on his own or through assisted labour ....
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.... cultivation with Maharashtra State Farming Corporation. Thus there was no denying the fact that sugarcane was cultivated on the land owned by MSFC Ltd., and also the basic agricultural activity in the form of preparation of land for cultivation, ensuring water supply, plantation of seeds, tending of saplings of sugarcane, spraying of insecticides and pesticides, manuring etc., was carried out in respect of sugarcane by the partners of the firm. It was clear stand of the assessee before the Assessing Officer that since land was owned by MSFC Ltd., it was not reflected in the Balance Sheet. The Assessing Officer was not justified in rejecting this argument. At the same time Assessing Officer has not doubted the cultivation of sugarcane on th....
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....tenance of soil in Kolhapur farm. (vi) Returning of 5250 metric tons of sugarcane at the termination of agreement. This condition is absent in the agreement dated 09.05.1997 relevant for assessment year 2002-03. This shows that relationship between MSFC Ltd., and the assessee firm can be properly described as that of the landlord and a tenant. The assessee firm has to make the payment of a fixed sum of Rs. 20,00,000/- every year during the subsistence of the agreement regardless of production from the agricultural farm. Under these circumstances and on the basis of the fact which were produced at the time of assessment, the Assessing Officer was not justified in rejecting the claim of assessee that income in question is derived by fir....