2020 (9) TMI 954

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....s are identical and related to the same issue, they are taken up for hearing together and disposed off by this common order. 2. Both the assessees have raised three identical grounds in their appeals however, the crux of the issue is that Ld. CIT (A) has erred in treating the lease income derived from the agricultural land of the assessees as 'income from other source' as against the claim of "agricultural income" which is exempt from tax U/s. 10(1) of the Act. 3. The brief facts of the case are that both the assessees are individuals filed their return of income for the relevant AY electronically on 31/3/2017 admitting income of Rs. 7,800/- and Rs. 40,000/- respectively besides agricultural income of Rs. 24 lakhs each. Subsequently, both....

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....e rent of Rs. 4,80,000/- for the period 25/5/2009 to 30/4/2010 earlier. Therefore, the Ld. AO opined that the explanation tendered by both the assessees that the entire lease rent of Rs. 24 lakhs were received during the relevant assessment year is a make belief statement. The Ld. AO further observed that the father/spouse of the assessees is the Managing Director of M/s. Sri Biotech Laboratories India Limited and both the assessees are also Directors in the company. It was also revealed that both the assessees had filed their return of income for the first time. The Ld.AO also observed that M/s. Sri Biotech Laboratories India Limited had wrongly deducted tax at source on the payment made to the assessees U/s. 194IB of the Act because secti....

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....ince the lease agreement is in operation it is evident that the land is not used for agricultural purposes by the lessee and is used only for the purpose mentioned in the agreement i.e. for research and development purposes. 3. It is also an admitted fact that the land leased to the company is only used for conducting research and development and seed development activity and that cannot be construed to be agricultural activity. 4. It is also apparent that the company to whom the assessee has leased out the land has not earned any agricultural income 5. For arriving at the conclusion that agricultural activities were not carried out on the land leased to the company, reliance was placed in the following decisions: - a. Proagro seeds....

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....he facts of the case it is apparent that both the assessees has proximity with the company to whom they have leased the land. Further, the apprehension of the Ld. AO appears to be quite reasonable because both the assessee has received the lease rent for the entire period of 5 years during the relevant assessment year, i.e., in the fag end of the expiry of the lease. In normal circumstances, such transactions do not occur. Further, I am unable to understand as to why such an extent of 40 acres of land is required for the Company to conduct research and development/ sea development activity. It is therefore possible that no activity was carried out on the land and the transaction is a modus-operandi to syphon cash out of the Company without ....