TaxTMI 
TaxTMI 
2021 (3) TMI 262
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....d ITO failed to appreciate the modus operandi of the Appellant's business which also includes buying saplings from other nurseries, planting them in its farm, nurturing, nursing and growing to the required level. 4. That the Learned IT Authorities erred in deciding the Appellant's eligibility of exemption u/s 10(1) of the Act on the basis of only one single document without considering the other contracts / documents. 5. That the Learned ITO and Learned CIT(A) erred in appreciating the provisions of section 2(1A) of the Act which defines "agricultural income". The relevant extract of the same is provided below: "....Explanation 3 - For the purpose of this clause, any income derived from saplings or seedling grown in a nursery shall be deemed to be agricultural income....." 6. That the Learned CIT(A) erred in placing reliance on the ruling of Karnataka High Court in the case of CIT v. Namdhari Seeds Pvt. Ltd. (2011) 16 taxmann.com 83 (Kar) without appreciating that the facts in the present case are different. 7. The Appellant / Company craves to leave to add, alter, modify, amend, substitute or delete all or any of the above Grounds of Appeal. 8. For these and other g....
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....rom sale of saplings and seedlings grown in assessee's nursery alone can be termed as agricultural income. The CIT(A) by placing reliance on the judgment of the Hon'ble jurisdictional High Court in the case of CIT, Central v. Namdhari Seeds (P) Ltd. reported in 341 ITR 342 concluded that the A.O. is justified in treating 50% of the exempted income as income from business or profession. 5. Aggrieved by the order of the CIT(A), the assessee has filed this appeal before the Tribunal. The learned AR has filed a paper book comprising of 256 pages enclosing therein the submissions, the judicial pronouncements relied on, copy of purchase order by M/s.Nam Estates Private Limited, financial statements of the assessee and the sister-concern for the assessment year 2016-2017, etc. In the written submission filed before the Tribunal, the learned AR has more or less reiterated the submissions made before the lower authorities. It was stated by relying on the judgment of the Hon'ble Apex Court in the case of CIT v. Raja Benoy Kumar Sahas Roy reported in 32 ITR 466 (SC), for cultivation of land does not comprise merely of raising the products of the land in the narrower sense of the term like ti....
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....r of the rent or revenue of any such land, or occupied by the cultivator or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any process mentioned in paragraphs (ii) and (iii) of sub-clause (b) is carried on : Provided that(i) the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue or the cultivator, or the receiver of rent-in-kind, by reason of his connection with the land, requires as a dwelling house, or as a store-house, or other outbuilding, and(ii) the land is either assessed to land revenue in India or is subject to a local rate assessed and collected by officers of the Government as such or where the land is not so assessed to land revenue or subject to a local rate, it is not situated-(A) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board and which has a population of not less than ten thousand ; or(B) in any area within the distance, measured aerially,-(I) not being more than two kilo....
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....bour upon the land itself. Those operations which the agriculturist has to resort to and which are absolutely necessary for the purpose of effectively raising produce from the land, operations which are to be performed after the produce sprouts from the land, e.g., weeding, digging the soil around the growth, removal of undesirable undergrowth, and all operations which foster the growth and preservation of the same not only from insects and pests but also from depradation from outside, tending, pruning, cutting harvesting and rendering the produce fit for the market would all be agricultural operations when taken in conjunction with the basic operations. The human labour and skill spent in the performance of these subsequent operations cannot be said to have been spent on the land itself. 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, would not be enough to characterise 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 in co....
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....t operations would also be agricultural operations if taken in conjunction with basic operations. However, subsequent operations by itself would not be considered as agricultural operations. Hence, if any income is earned by carrying out the subsequent operations without carrying out the basic operations then such income would not be considered as agricultural income. It further declares that the nature of the product is irrelevant. The agricultural product would not only include products for sustenance of human being but also products of utility for a trade and commerce. 7.3 To adjudicate the issue, the terms of the agreement, the purchase order, the invoices etc. need to be examined in order to determine the scope of work undertaken by the assesseefirm, whether it is mere supply of saplings and seedlings grown in its nursery or is it a composite contract which goes beyond, by undertaking work in client's site, by supply of soil, supply of fertilizer, insuring the plant, engaging horticulturists, etc. The copies of the PO, invoices of the assessee and the sisterconcern are placed from pages 219 to 238 of the paper book filed by the assessee. Annexure 1A of the final bill of quant....