TaxTMI 
TaxTMI 
2021 (4) TMI 844
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.... local market. The assessee had filed return of income for the assessment year 2012-13 on 30.03.2013 declaring taxable income of Rs. 2,84,754/- and agricultural income of Rs. 29,81,938/-. In support of the agricultural income, the assessee has submitted an income and expenditure statement and also the balance sheet. In the assessment order, the AO has noted that the assessee is exporting mangoes from his own garden and purchasing and selling the same and showing it as his agricultural income. The assessee has submitted before the AO that he has not purchased mangoes from the market to export the same but he is only exporting the mangoes that are grown from his own mango garden. The AO has also raised one more doubt that the assessee has not maintained any record that what is the total tonnage of mangoes grown in his mango garden and therefore, he is of the opinion that as per the report of the District Collector, Thiruvallur which is based on the National Horticulture Board that the average yield for tree which is around 15 years of age is shown 120 to 150 KG per tree. Applying the outer limit of the said yield range 150 KG per tree, the assessee could have a best produce of 90 ton....
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....ral income. Hence the AO considered and disallowed a substantial portion of the agricultural income claimed by the appellant and brought the same to tax. 6.5 The above views of the AO are not correct. As rightly submitted by the appellant, the agricultural income means income derived from the cultivation of agricultural crops. The income derived from the sale of agricultural produce is also agricultural income. The sale of the produce need farm level. It is the choice of the farmer to choose the place and method of sale. He can sell the produce in the field itself, or he can take the produce to the agriculture market for sale or he can -store the produce for longer periods of time and then sell at a later date. It is the choice of the former to choose the method and the way of marketing his produce. The intention of the farmer is to get the maximum price for his produce. The Dept: cannot expect the farmer to sell his farm produce in a particular way or at a particular place. 6.6 Thus, the activity of the 'agriculture' doesn't stop, once the crop is harvested. It continues till the farmer sells his produce by any means in the market place whether in India or abroad....
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....re. The Agriculture is basically of two types - Subsistence Agriculture (Cultivation predominantly for one's own/family consumption) and Commercial Agriculture (Cultivation predominantly for marketing). In the present days, the farmers have totally shifted from Subsistence agriculture to Commercial agriculture. Cultivation of certain crops like cotton, sugar cane, tobacco etc. is totally commercial, because they are meant for personal consumption of the cultivator and are meant for marketing alone. Yet, cultivation of all these crops is agriculture and income derived from such cultivation is agricultural income and exempt from tax. 6.12 Any innovative ideas, technologies employed, the methods, modes and strategies adopted by the agriculturist to market his agricultural produce and all other steps, strategies and activities undertaken by the agriculturist for obtaining better price for his produce, though appear to be entrepreneurial activities, is part and parcel of his agricultural activity. 6.13 In the present appellant's case, since the appellant's agricultural product (mangoes) remained unchanged throughout the period and is finally sold in the same f....
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....district average yield. In such a case, one has to see the yield potentiality of the varieties grown in the garden, and not the average national/state/district yield. 6.17 Further, the varieties grown by the appellant is Banganapalli and Himampasand which are high yielding varieties compared to the shy (irregular) bearers like Malagoa etc. Further, a well- maintained mango garden, in its prime age, can yield up to 24 tons per acre in a year. 6.18 On an average, a normally maintained mango orchard gives the yield at the range of 5 to 9 tons per acre, per year. (Source: Publications of National Horticulture Board {nhb.gov.in/reportfiles/mango/MANGO.htm}), It should be noted here, that, these are only average yield and not the yield potentiality, which would be much higher than the average yield. Normally, mango plants start bearing at the age of 3-4 years, and the yield may be as low as 10- 20 fruits (2-3kg) per tree, rising to 50-75 fruits (10-15kg) in the subsequent years, and to about 500 fruits (1 00kg) in its tenth year. in the age group of 20-40 years, a tree bears 1000-3000 fruits (200- 600kg) in a year. The productive age of a grafted mango tree is usually u....
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....etter price. If the produce is exported to foreign markets, it will fetch still a higher price. Therefore, the appellant's export sale of mangoes and realizing sale price at 6 times than that of local farm level sales, cannot be considered as abnormal or unrealistic. Of-course, in each level there will be additional expenditure to be incurred by the farmer. In fact, the existence of higher expenditure by the appellant for these respective activities, itself is an indication and evidence, that the appellant had actually engaged in these activities and realized higher sale price for his produce (mangoes). It is not out of context to mention here that, in the assessment order, the AO himself has observed that the assessee has resorted to out of box thinking, studied and explored the international markets carefully and has identified suitable markets to export, invested huge money in advance on packing material and freight, required for exporting mangoes to abroad, and has been exporting mangoes on a regular basis from year to year, to these countries. All these activities have added value in realising higher sale price for the mangoes produced by the appellant. Hence no adver....
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....rden have remained in the same form of mangoes and sold in the same form to the foreign countries. The entire activity starting from growing the mangoes, harvesting them, grading, packing and exporting them abroad, constitutes agricultural activity and the entire sale proceeds derived by the appellant is nothing, but agricultural income and exempt from tax u/s 10 (1) of the IT Act. 6.28 Hence the AO is not justified in coming to the conclusion, that the appellant's activity of export of mangoes is a commercial or business activity, and the income earned from the same needs to be treated as a business income. 6.29 As a result, the finding by the AO, that the agricultural activity undertaken by the appellant, is nothing but a business activity and that the same needs to be as a business income, is not factually and legally tenable, and hence not justified and needs to be set aside. Therefore, the addition made by the AO on this ground for all the AY's under consideration on this issue is deleted." On being aggrieved, The Revenue is in appeal before us. 6. We have heard both the sides, perused the materials available on record and gone through the orde....