TaxTMI 
TaxTMI 
2022 (11) TMI 1288
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....ppellant company's activities falls under Agricultural activities and the said agricultural income is exempt from tax u/s.10(1) of the Act and the same was examined by the A.O. during the course of assessment. 2. The Pr. CIT was not correct in not appreciating the facts that the A.O. has verified the Agricultural income claimed as exempt and allowed the same as exemption from ta, based on the Appellant company's activities, during u/s.143(3) proceedings by calling detailed information in this regard. 3. The Pr. CIT erred in invoking the provisions of section 263 of the Act ignoring the facts that the AO has made detailed enquiry about the allowability of Agricultural income as exempt by issuing specific show cause notice dated 16.12.2019. 4. The Pr. CIT was not correct in directing AO to revise the assessment by invoking he provisions of section 263 relying on the decision of Hon'ble High court in the case of Namdhari Seeds Pvt Ltd without appreciating the facts that the Appellants company activities falls under Agricultural activities and the same is exempt u/s.10(1) of the Act. 5. The Appellant craves leave to add, to alter, to amen....
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.... the financials that you had claimed exemption of agricultural income u/s 10(1) amounting to Rs.14,50,17,783 /- and the same has been allowed in the order passed u/s 143(3). The company is into the R & D of Germ plasm, production of foundation seeds from germ plasm, processing and marketing of commercial seeds in India and abroad. The basic operation of agriculture is not carried on by the assessee and assessee enters into agreement with farmers and agricultural operations are conducted by farmers. 4. In decision of Hon'ble Karnataka High Court in CIT V. Namdhari Seeds P. Ltd., it was held that the such income of agri-business firms come under the purview of business income which attracts tax under the provisions of IT Act, 1961. Therefore, the income derived there from does not qualify as agricultural income and has to be treated as business income. 5. Therefore, you are required to show cause why the income derived by company from sale of commercial seeds amounting to Rs.14,50,17,783 /- should not be treated as business income as it does not qualify as agricultural income. 6. As such, action u/s 263 of IT Act is warranted and the assessment for the ....
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....tails were called for by the Ld.AO during the original assessment proceedings. In support of his contention, he placed reliance on the following decisions: • Reliance Payment Solutions Ltd Vs Principal Commissioner of Incometax- 8, [2022] 136 taxmann.com 277 (Mumbai - Trib.) • K R Mahesha Vs Pr. CIT , Bengaluru - 3, ITA No.365/Bang/2021 - AY 2016-17, order dated 05.01.2022 • Pr. CIT Vs Brahma Centre Development Pvt. Ltd (Delhi -HC) ITA No.116/2011 & 118/2011 dt 05.07.2011 • CIT Vs P Sudhar [2015] 61 taxmann.com 17 (Karnataka), 6. The Ld.AR contended that, the entire proceedings initiated under section 263 of the Act, is based on the decision of Hon'ble Karnataka High Court in case of Namdhari Seeds Pvt.Ltd., wherein, the Hon'ble Court on similar set of facts, denied the claim under section 10(1) of the Act. 7. The Ld.AR submitted that, the assessee entered into agreement with farmers for production of hybrid seeds and that, the farmers upon the instructions and specifications and guidance by the assessee, carried on with the cultivation of agricultural produce. He submitted that, the assessee not only produces in the leased ....
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....ation. The assessee in response filed following details: 11. We note that the in paper book filed before us, the assessee has filed copies of above details. The agreement entered into by the assessee with the farmer, is the agreement for raising seed plantations. It is submitted that, all these agreements were filed before the Ld.AO in reply to the query raised, during the original assessment proceedings, in respect of the claim made by the assessee. A sample agreement with a farmer is placed at pages 22-29 of the paper book. 12. We have perused the agreement with the farmer relied by the Ld.AR. This agreement reveals that, the farmer was absolute owner or the leased land and, the assessee agreed to supply fertilisers and pesticides as per the schedule therein at specified time. It is also agreed by the assessee that, a particular variety of seed would be supplied to the farmer on credit basis. Similar is the position in all the agreement placed in the paper book. 13. Before us, the assessee has not filed any agreement, showing the lands being leased in favour of the assessee. It is submitted that these were the documents filed by the assessee in reply to the query raised ....