TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 938
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....he Hon'ble CIT(A) erred in upholding the claim of the assessee to treat the income on the sale of foundation seeds as agricultural Income and allow exemption under section 10(1) of the Act, when the assessee has not maintained separate books of accounts and has bifurcated the net profit into income from agriculture and income from business according to its own convenience to show more of agricultural income which is exempt 4. Any other ground that may be urged at the time of hearing." 3. The assessee pleads the following grounds in the instant appeal ITA.No.313/Hyd./2016 : 1. The Ld. Commissioner of Income Tax (Appeals) 5, Hyderabad erred in dismissing the appeal of the assessee filed against the order passed by the A.O u/s 143(3) of the Act, both on facts and in law. 2. The Ld. CIT (A) erred in not allowing the Income admitted by the assessee in the Revised Return of Income as cultivation income. 2.a The Ld. CIT(A) erred in denying the exemption u/ s 10(1) of the Act for which the assessee is legally entitled to, merely on technical grounds which is not correct and not justified. 2.b The Ld. CIT (A) ought to have appreciated the ....
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....otice under section 142(1) dated 14.03.2014, the assessee has enclosed copy of revised return filed on 19.02.2014 declaring total income at Rs. NIL. The Assessing Officer rejected the revised return filed by the assessee on the ground that, the said return has been filed beyond the due date provided under section 139(5) of the Act. Further, during the course of assessment proceedings, the Assessing Officer called-upon the assessee to furnish relevant evidences in support of claim of agriculture income. The Assessing Officer had also called-upon the assessee to file relevant evidences in support of weighted deduction claimed under section 35(2AB) of the Income Tax Act, 1961 [in short "the Act"] towards research and development expenditure. The Assessing Officer after considering the submissions of the assessee, rejected the agricultural income claimed towards sale of foundation seeds on the ground that, the foundation seeds produced by the assessee company are the result of intensive research and other technical inputs and further, the activity of research was inextricably linked and interwoven with the process of growing of foundation seed and both activities, therefore had to be c....
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....ncome from sale of foundation seeds as agriculture income and allowed exemption under section 10(1) of the Act, when the assessee is not entitled for the said claim. Learned CIT-DR further submitted that, to treat the income on the sale of foundation seeds as agricultural income and allow exemption under section 10(1) of the Act, the assessee must maintain separate books of accounts and furnish bifurcation of income from agriculture activity and nonagricultural activity. In the present case, the assessee has not furnished any details and the learned CIT(A) without appreciating the relevant facts, has simply deleted the addition made by the Assessing Officer. Therefore, he submitted that, the Order of the learned CIT(A) on this issue should be set-aside and addition made by the Assessing Officer should be upheld. 8. None appeared for the assessee. We have heard the learned CIT-DR, perused the material on record and had gone through the orders of the authorities below. The assessee is engaged in the business of plant breeding, research, cultivation, production and marketing of hybrid seeds, foundation seeds and production and marketing of well yielding hybrid seeds and various com....
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....d by the assessee. 11. None appeared for the assessee. We have heard the Learned DR, perused the material on record and the orders of the authorities below. The Assessing Officer disallowed the weighted deduction claimed by the assessee under section 35(2AB) of the Act on the ground that, the assessee has not satisfied the conditions prescribed for claiming deduction by filing necessary evidences including Form-3CK issued by the Competent Authority, certifying the amount eligible for deduction. We find that, the provisions of Section-35(2AB) of the Act mandates that, where a company is engaged in the business of bio-technology or any business of manufacturing and production of article, which is not in the list of 11th Schedule and incurred any expenditure on scientific research, not in the nature of any cost of land or building, on in-house research and development facility which has been approved by the Prescribed Authority which is the Secretary, DSIR, Government of India, then, the assessee shall be allowed sum equal to one and half times of the expenditure so incurred as deduction. Provisions of sub-section (4) provides that, Prescribed Authority shall submit it's report....
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....ed is income from business. 7.2 It was submitted by the appellant that the identical issue came up before the honorable Hyderabad bench of ITAT in the assessee's own case for the AYs 2002-03 to 2005-06 vide ITA No 469,470,480,481,76/H/2008. A gist of the decision is presented as under: The Department in its appeal in ITA Nos.469, 470/Hyd/2008 and 1. 76/Hyd/2009 raised the following grounds: 1. The CIT(A) erred in allowing the income from sale of foundation seeds as income from agricultural activity and exempted u/s 10(1) of the Act. 2. The CIT(A) ought to have considered that the production of basic seeds and sale of hybrid seeds is an integral activity undertaken for the ultimate sale of hybrid seeds and income should be treated as income earned out of business activity. While dismissing the appeal, it was held that: "The issues raised in the Revenue appeals has been squarely covered by the order of the Tribunal in assessees own case for the assessment year 2001-02 reported in 314 ITR (AT) 231 Hyderabad wherein it was held that : The assessee was carrying on agricultural operations and growing basic seeds on the lands. It was not the case of the Revenue ....
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....sold by the assessee, the same is the result of the basic operations on the land on expending human skill and labour thercon and it is only after performing several operations such as weeding, watering, manuring, etc., the resultant product is grown and made ready for sale in the form of basic seeds. Thus the basic seeds sold by the assessee were the result of primary as well as subsequent operations involving huge skill and efforts as defined under s. 2(1A) and the same is an agricultural income as provided under s. 2(1A), entitled to exemption under s. 10 (1). 7.4 After analyzing the facts of the case and issue in hand, which is identical to issues decided for assessment years 2001-02 and 2002-03 to 2005-06 and following the principles of judicial discipline, I hold that that the basic seeds are produced by the assessee by doing basic agricultural operations. The basic seeds are the result of the basic operations on the land on expending human skill and labour thereon. Thus, the basic seeds sold by the assessee were the result of primary as well as subsequent operations involving skill and efforts as defined under s. 2(1A) of the IT Act and the same is an agricultural incom....
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.... CIT(A), he directed the assessing officer to treat the income from basic seed as agriculture income and allow exemption u/s 10(1) thereupon. Simultaneously, he directed the assessing officer that no R & D expenditure to be allowed against the business income in view of the presence of 14A of the Act. The appellant filed the appeal before the ITAT and raised the ground that the learned CIT(A) has erred in holding that no research and development expenditure can be allowed against the business income of the assessee in view of the provisions of Sec. 14A of the IT Act and accordingly directed the assessing officer to disallow the research expenditure claimed by the assessee. Taking into account facts of the case, the ITAT (ITA No 469,470, 480,481,76/H/2008 dated 18.06.2010 held that: "9. We have heard both the parties and perused material on record. The general principles to be applied in similar circumstances have been laid down by the courts in the decisions cited before us. In the decision cited by the learned Representative of the assessee in Waterfall Estates Ltd. case (supra), the assessee company was deriving income from tea and coffee estates and coffee company was derivin....
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....n respect of business activity giving rise to income, profit or gain taxable under the income tax Act, can be allowed as deduction and not otherwise. The court held that to find out whether a deduction claimed is permissible under the Act or not, all that has to be done is to examine the relevant provisions of the Act. That equitable consideration are wholly out of place in constructing the provisions of taxing statute and provisions of the statute have to be taken as they stand. In KCP Ltd. case (supra) while affirming the decision of AP High Court in Challappali Sugar Ltd. case (supra), the Hon'ble SC reiterated the same view by applying the earlier decision in the case. 9.1. Now we have to examine the facts of the present case in the light of the above rulings given by various courts. We have already confirmed the fact that Document 7 the assessee has been carrying two activities viz., agricultural activities and commercial activities. The objectivities of agricultural activities is pursued by development of parent seeds and commercial activities pursued by development of hybrid seeds from the parent seeds. The parent seed is developed by assessee by an act of agricult....