TaxTMI 
TaxTMI 
2026 (4) TMI 1182
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....f CBDT Instruction F. No. 225/157/2017/ITA-II dated 23.06.2017. (b). That, the scope of limited scrutiny of the assessee has been expanded without following the mandatory procedure laid down by CBDT to expand the scope of a limited scrutiny or to convert limited scrutiny into a complete scrutiny. 2. That, the Ld. CIT(A) has wrongly confirmed the addition of Rs. 13,69,71,824/- by treating agricultural income as business income. 3. That, the Ld. CIT(A) has wrongly confirmed the addition of Rs. 23,643/- on account of unexplained cash credit u/s 68 of the Income Tax Act, 1961. 4. That, the Ld. CIT(A) has wrongly confirmed the addition of Rs. 8,95,024/- on account of unexplained expenditure u/s 69C of the Income Tax Act, 1961. 5. That, the Ld. CIT(A) has wrongly confirmed the addition of Rs. 6,444/- u/s 40(a)(ia) of the Income Tax Act, 1961. 6. That, the Ld. CIT(A) has wrongly confirmed the initiation of penalty proceedings u/s 274 r.w.s 270A and Section 271AAC of the Income Tax Act, 1961. 7. That, the Ld. CIT(A) has wrongly confirmed the levy of interest u/s 234A, 234B and 234C of the Income Tax Act, 1961. 8. That,....
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....e of the assessing officer, the assessee furnished his reply on 26.11.2024, along with necessary documentary evidences. The relevant portion of his reply is reproduced hereunder: "The company is engaged in production and selling of hybrid seeds of various grains, pulses, and vegetables. The company has also in-house research and development facilities for development of hybrid seeds approved by DSIR. The company takes on lease land from farm land owners and engages the people for production of seeds on that land. The company compensate the growers engaged by it for fertilizers, labour, pesticides, and other Agri-operations. The company owns the risk of quality of seeds and expenditure that may be incurred, therefore, these seeds are then sorted, tested, and processed for selling to the farmers for raising the crops. The company enters into agreements with the seed growers. Computation of income for assessment year 2023- 24 is enclosed. Annexure-1 The company is engaged in production and processing of seeds which are produced by company and also by farmers who are not registered under the GST. The company has spent on seed production Rs. 107,88,92,508/- on its leas....
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..../- against which, expenses have been claimed at Rs. 90,51,65,303/-. Accordingly, net agriculture income has been shown at Rs. 13,69,71,874/-, in its income tax return (ITR). The assessing officer noticed that in absence of complete details/evidences it is not verifiable how much land was there, how much crops/seeds were grown, at what rate agriculture produce were sold, what is gross receipts & what is gross expenses. 10. Further, assessee has submitted in its reply received on 31.01.2025, that the company is engaged in production, processing and trading of hybrid seeds. In order to produce seeds, the company takes on lease land spread over various areas of district by entering into Seed Production Agreement with landowners. 11. The assessing officer also observed that looking to the facts of the assessee's, case, the agriculture activity is part and parcel of assessee's business and the income originated from the same cannot be considered, as exempt, as agriculture income, as claimed by the assessee- company, rather the crops grown and sold, as part of its research and development and upon hybrid seeds, are in absolute terms, its business receipts. In view of these f....
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....wn in invoices issued by party, therefore above accounting entries are not considered by party, accordingly difference. 3. Super Seed Pvt. Ltd. As per cross ledger there is a difference of Rs. 3,67,166/- in closing balance Reason: - During the year invoice of Rs. 3,11,800 (dt. 08.10.2022 as shown in ledger) there was weight loss of Rs. 50 kg in goods which are debited in party's account same are not accounted by party, therefore difference. 4. Agricultural income (a) Computation of Agricultural income and identification of growers. The amount of Rs. 1,27,45,53,630/- mentioned in the notice represents the value of purchases of traded goods, which is clearly reported on the face of the Statement of Profit and Loss. Thus, we humbly submit that above reported figure of Rs. 127,45,53,630/- is not agricultural income. The company has earned net agriculture income of Rs. 13,69,71,874/- from agricultural activities, for which the detailed computation/calculation is enclosed herewith. Refer Annexure-10. The net agricultural income is arrived at as under: Head of Account Amount in Rs Turnover from sale of agricultura....
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....tion nor subsequent operations ordinarily employed by the farmer or agriculturist, as the assessee- company neither has derivative interest in the land nor it has actually cultivate the land. Further, production of seed is made with highly technical method, whereas grain is generally produced by conventional method. Therefore, assessee- company does not fulfil basic condition of agriculture. If the basic operation of agriculture is not carried on by the assessee -company, then the harvested foundation seeds purchased by him and converting them to certification seeds cannot be termed as integrated part of the foundation activity of agriculture. Thus, the net agriculture income shown in income tax return (ITR) of Rs. 13,69,71,824/-, cannot be treated, as agriculture income and was treated by the assessing officer, as its business income of the assessee- company and accordingly the same was added to the total income of assessee. 14. In addition to above, the assessing officer noted that the assessee has shown outstanding liabilities of Rs. 11,68,94,454/- in the balance sheet. Out of which assessee could not explain the liability of Rs. 23,643/- (relating to KM Chauhan & Associates ....
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....mercial activity involving research and development of parent seeds, controlled hybridisation and extensive post-harvest processes such as testing, treatment, certification and packaging. The basic agricultural operations of tilling, sowing and harvesting were not carried out by the assessee itself but by farmers engaged under seed production agreements. Therefore, ld.CIT(A) confirmed the action of the assessment officer, and dismissed the ground raised by the assessee. 18. About the addition of Rs. 8,95,024/-made by the assessing officer, on account of unexplained expenditure u/s 69C of the Act, the ld.CIT(A) noted that there were material differences between the balances shown in the assessee's books and the balances confirmed by the respective creditors. In all such cases, the assessee reflected lower outstanding liabilities as compared to the confirmations received, giving rise to a reasonable inference that the liabilities had either been settled outside the books or had ceased to exist. The explanations offered by the assessee attributing such differences to discounts, quantity loss or unaccounted invoices were not considered by ld.CIT(A). The ld.CIT(A) noted that in t....
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....s not press ground pertaining to addition of Rs. 6,444/-, on account of disallowance u/s 40(a)(ia) of the I.T. Act. We shall adjudicate the above disputed additions one by one, as follows. Arguments of learned Counsel for the assessee for addition of Rs. 13,69,71,824/- on account of net agriculture income, treated as business income. 22. Shri Kalpesh Doshi, Learned Counsel for the assessee, begins by pointing out that assessee has carried out agriculture activities and claimed income from agriculture as exempt income as per section 10(1) r.w.s. 2(1A) of the Income Tax Act. The assessee takes land on lease, that is lease agriculture land from farmland owners and carry out the agriculture activities, and engages the labourer for production of seeds on the agriculture land. The assessee incurs expenses for fertilizers, pesticides, labour and other agricultural operations. Moreover, the assessee enters into agreements with all these seed growers and the assessee bears the risk of the quality and quantity of the seeds and all the expenditure related to agriculture operation is incurred. The copy of the lease agreement was submitted before the assessing officer. It can be observed ....
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....x. Hence, such income should not be assessed under the head income from business. To support his arguments, learned Counsel for the assessee relied on the following judgements: (i) ACIT vs. Ajeet Seeds Ltd. (I.T.A No. 20 of 2014) (Bombay HC). (ii) A.G. Biotech Laboratories (India) Ltd. Vs. ITO (180 taxmann.com 850) (Telangana). (iii)PCIT vs. Nuziveedu Seeds Ltd. (178 taxmann.com 486) (Telangana) (iv) ITO v. M/s Nath Bio Genes (1) Ltd. ITA No. 642/PUN/2015, ITA No. 398/PUN/2016 & ITA No. 1505/PUN/2016, ITA No. 1548/PUN/2017 (Pune Trib.) (v) Fresh Bowl Horticulture (P.) Ltd. v. ITO [2024] 169 taxmann.com 49 (Mumbai -Trib.) (vi) Bayer Crop Science Ltd. Vs. DCIT (ITA NO. 3763/Mum./2015) (Mum. Trib.) (vii) DCIT vs. Genuine Seeds Pvt. Ltd. (ITA No. 2754/PUN/2016) (Pune Trib.) (vii) DCIT vs. Pravardhan Seeds Pvt. Ltd. (ITA No. 2091/Hyd/2017) (Hyd. Trib.) (ix) M/s. Advanta India Ltd. Vs ACIT (ITA No. 819 & 820/Bang/2010) (Bang. Trib.) (x) Profarm Seed India (P.) Ltd. Vs. ITO (143 taxmann.com 393) (Hyderabad Tribal.) 24. The ld.Counsel, also submitted written submission before the Bench, which we ha....
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....as Roy, [1957] 32 ITR 466. 26. The ld.DR submitted that activity of mere supervision, technical guidelines or alleged reimbursement of cultivation expenses on predetermined terms does not amount to carrying on agricultural operations within the meaning of Section 2(1A) of the Act. Actually, it has also not reimbursed any cultivation expenses. The assessee has simply procured the seeds from the farmers at prevailing market prices and after certification process sold the same to its customers. The assessee has neither any derivative interest in the land nor it had actually cultivated the land. The assessee has failed to establish any substantial derivative interest in land, as the agreement relied upon do not confer effective control or possession of land so as to characterise the assessee as an agriculturalist. The ld.DR for the revenue, relied on the following judgements: (i) The Hon'ble F Bench of ITAT, Delhi in the case of P.H.I. Seeds (P.) Ltd. v DCIT [2018] 96 taxmann.com 493 (Delhi - Trib.). (ii)The Hon'ble Karnataka High Court in CIT v. Namdhari Seeds (P.) Ltd. [2011] 16 taxmann.com 83 (Karnataka). (iii)The Hon'ble PUNE BENCH 'B&#....
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.... Incentive to Farmers 1,70,22,641 Total Production expenses 1,07,88,92,509 4. The appellant takes on lease agriculture land from farmland owners and carry out the agriculture activities, engages the labourer for production of seeds on the impugned agriculture land. 5. All the activities undertaken by the seed growers/farmers are carried out on behalf of the appellant and as per the directions and supervision of the employees and coordinators of the appellant 6. The definition of the agriculture income as per section 2(1)(A) of the I.T. Act is very wide and it includes all such activities as carried out by the appellant. Para 2 Page 1 The activity of mere supervision, technical guidelines, or alleged reimbursement does not amount to carry out agriculture activity 1. The appellant is engaged in all the activities that lead to the final production of the seeds 2. The appellant takes on lease agriculture land from farmland owners and carry out the agriculture activities, engages the labourer for production of seeds on the impugned agriculture land 3. The appellant also incurs expenses for fertilizers, pesticides, labour and other agricultur....
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....arried out over the agricultural land. 15. The foundation seeds are handed over to the farmers through the production supervisors for the purpose of sowing and the assessee provides necessary inputs, such as pesticides and insecticides, etc. to facilitate the cultivation of hybrid seeds 16. The appellant carries out various detailed tests on the farm soil and provides necessary guidance to the farmers for soil bed preparation and planting/sewing of foundation seeds to ensure that there is no loss of yield and quality. 17. Reliance is placed on: • Puransingh M. Verma v. CIT [2015] 56 taxmann.com 218/230 Taxman 470 (Gujarat). • CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC) • ACIT vs. Ajeet Seeds (ITA no. 20 of 2014) Bombay HC • A.G. Biotech Laboratories (India) Ltd. Vs. ITO (180 taxmann.com 850) (Telangana) • PCIT vs. Nuziveedu Seeds Ltd. (178 taxmann.com 486) (Telangana) • ITO v. M/s Nath Bio Genes (I) Ltd. ITA No. 642/PUN/2015, ITA No. 398/PUN/2016 & ITA No. 1505/PUN/2016, ITA No. 1548/PUN/2017 (Pune Trib.) • Fresh Bowl Horticulture (P.) Ltd. v. ITO [2024] 169 taxman....
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....CIT vs. Ajeet Seeds (ITA no. 20 of 2014) Bombay HC • A.G. Biotech Laboratories (India) Ltd. Vs. ITO (180 taxmann.com 850) (Telangana) • PCIT vs. Nuziveedu Seeds Ltd. (178 taxmann.com 486) (Telangana) • ITO v. M/s Nath Bio Genes (I) Ltd. ITA No. 642/PUN/2015, ITA No. 398/PUN/2016 & ITA No. 1505/PUN/2016, ITA No. 1548/PUN/2017 (Pune Trib.) • Fresh Bowl Horticulture (P.) Ltd. v. ITO [2024] 169 taxmann.com 49 (Mumbai - Trib.) • Bayer Crop Science Ltd. Vs. DCIT (ITA NO. 3763/Mum/2015) (Mum. Trib.) • DCIT vs. Genuine Seeds Pvt. Ltd. (ITA No. 2754/PUN/2016) (Pune Trib.) • DCIT vs. Pravardhan Seeds Pvt. Ltd. (ITA No. 2091/Hyd/2017) (Hyd. Trib.) • M/s. Advanta India Ltd. Vs ACIT (ITA No. 819 & 820/Bang/2010) (Bang. Trib.) • Profarm Seed India (P.) Ltd. Vs. ITO (143 taxmann.com 393) (Hyderabad - Trib.) Para 4 Page 1 The "A" has no derivative interest in the land 1. It is respectfully submitted in this regard that it is not necessary that a person who claims the agriculture income should own the land, having interest in the land will suffice to carry out agricult....
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....are paid to other persons for the material purchases and wages etc. 19. Therefore, the contention of the Id. AO is not justified Page 2 Para 6.2 Biological Impossibility 1. The appellant carries out agreement with the farmers for the lease of land. 2. The agriculture operation is carried out fully by the appellant company with the help of their supervisor and staff and the owner of the land has no role to play. 3. The appellant puts foundation seeds in the farm, provides fertilizer and pesticides, and appoints laborers for the cultivation. 4. The farmer is required to provide only water from the farm area and therefore the entire process is carried out by the appellant. 5. The contention that the agreement is for short period is not correct. 6. The appellant company carries out the verification and finalize the farm land for lease, once the land is finalized the appellant starts operation, the paper work and documentation takes little more time as per the availability of the farmer and the appellant legal team. Therefore, the time limit cannot be decided on the basis of the lease agreement. 7. The seeds are also of the different types and therefore som....
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....ced the confirmation of the farmer, the agreement is duly signed by the both the parties, the details of crop is given, the details of expenses are given along with various expenses of agriculture production. 7. Therefore, the agreement is genuine and carried out within the ambit of the governing applicable laws. Page 4 Para 6.4 Common Purchaser of stamp paper 1. Purchase of stamp paper by a person on behalf of the company is a procedural aspect and does not invalidate or cast doubt on the genuineness of the agreement. 2. No Legal Requirement on "Who Must Purchase Stamp Paper" Under the Indian Stamp Act, 1899: It does NOT mandate that stamp paper must be purchased in the name of the executing party 3. Validity of Instrument depends on Execution and not on purchaser name. An agreement becomes valid when signed by parties, supported by consideration (as per Indian Contract Act, 1872) The identity of stamp purchaser is irrelevant to the formation of contract enforceability. 4. Courts have consistently held that the samp paper can be purchased by any person, and the document executed thereon remains valid. The purchaser of stamp paper is merely a facilitator not ne....
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....g agricultural items and is an agriculturalist or not? In order to find out this answer, we should examine the important terms and conditions of the lease agreements, which are reproduced below: "BACKGROUND TO THIS AGREEMENT (A) BSHSL is engaged inter-alia in the business of growing, development, production and marketing and sale of seeds through various Farmers/growers with the help of coordinators. (B) The Farmers/grower is the sole and absolute owner and is in the possession of agricultural and as defined and detailed in Schedule-1 and has absolute right of cultivation over the said agricultural land. (C) BSHSL is desirous of entering into this agreement with the grower for leasing his land and for the purpose of producing seeds by utilizing the land owned by the farmers/grower. The Farmers/grower has agreed to provide the exclusive use of his land to carry out the agricultural operations & for production of crops to BSHSL on lease rental as per Schedule-II (D) The Farmers/grower has agreed to provide the land for production of creps to BSHSL for the lease rental as per Schedule-Il The Company will also compensate for all production e....
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....ame of Coordinator for this activity and agreement is as mentioned in Schedule-IV. The BSHSL Company is entitled to carry out or direct the farmers to carry out agricultural activities considered necessary for the better production of seeds. It is further agreed that BSHSL Company has a beneficial ownership of the land to carry out its agricultural operations as the farmer agrees to allow exclusive use of their land to the BSHSL company and the agricultural produce shall belong to the BSHSL entirely. GROWERS REPRESENTATION 6.1 In consideration of the services rendered by the Farmers/grower in terms of this Agreement. BSHSL shall reimburse the agreed expenses incurred by Farmers/ grower for land preparation, cultivating the land, Irrigation, sowing, fertilization, purchases of pesticides, harvesting etc or any such other agriculture expenses, as detailed in Schedule-II The reimbursement of such expense would be made by BSHSL either directly to the farmer/grower account or through the coordinator appointed by the company to supervise the farmer/grower agriculture, land and activity. BSHSL would also pay to the Farmers/grower compensation at the rat....
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....arised and accrued on account of agricultural activities, would be exempt from tax, and therefore, not assessable under the head, "business income". 30. Now, we shall examine the meaning of the agricultural income and the scope of agricultural income. That is, what are the items/things are included in the definition of agricultural income, for that we have to examine the provisions of Section 2(1A) of the Act, which is reproduced ( to the extent, useful for our analysis): (1A) "agricultural income" means :- (a) any rent or revenue derived from land which is situated in India and is used for agricultural purposes; (b) any income derived from such land by - (i) agriculture; or (ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in kind to render the produce raised or received by him fit to be taken to market; or (iii) the sale by a cultivator or receiver of rent in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii) of this sub-clause; ....
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....o incurs expenses for fertilizers, pesticides, labour and other agricultural operations. Moreover, the assessee enters into agreements with all these seed growers and the assessee bears the risk of the quality and quantity of the seeds and all the expenditure related to agriculture operation is incurred. The assessee submitted copy of agreement before the assessing officer. It can be observed from the agreement that the assessee also appoints a Coordinators for supervisions for coordinating with various farmers and seed growers and also to guide them in carrying out the agricultural operations on behalf of the assessee. The agreement also clearly states that farmer has to carry out agricultural operations exclusively for the assessee, during the period of the agreement. The assessee is engaged in all the activities that lead to the final production of the seeds. The assessee is responsible for the quality of the hybrid seeds that are produced and ultimately these seeds are sorted, tested and processed for selling to the farmers for raising the crops. The lease agreement also clearly states that the assessee will have the ownership of all the agriculture produce from the agriculture....
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....ole process from the selection of the land till the final stage that the seeds are produced, the various stages are as under: (i) The assessee identifies its employee to undertake the role of 'production supervisor and deputes them to visit and actually supervise the agricultural operations to be undertaken on the agricultural land. (ii) The assessee with the assistance of the coordinators identifies the farmers who possess the desired quality of land and are willing to work jointly with the assessee to cany out agricultural operations for the production of hybrid seeds. (iii) The assessee's employees conducts meetings with the farmers/labour and evaluates parameters like quality of land, quality of soil, location of the village, climatic conditions, undertakes soil testing, etc. (iv) Once the farmer is selected, the assessee enters into a Production Agreement with the farmer for joint agricultural operations being carried out over the agricultural land. (v) The foundation seeds are handed over to the farmers through the production supervisors for the purpose of sowing and the assessee provides necessary inputs, such as pesticide....
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....rs/farmers clearly mentions the following aspects related to agriculture land: (i) Lease rental will be paid for the use of Agricultural Land. (ii) The farmer is engaged by the assessee to carry out agricultural operations over the leased land exclusively for the assessee. (iii) Farmers to carry out agricultural activities under the guidance and supervision of the assessee or the staff/coordinators appointed by the assessee. (iv) The assessee has the beneficial ownership of the land to carry out the agricultural operations. (v) The farmer agrees to allow exclusive use of the land to the assessee. (vi) The entire agricultural produce will belong to the assessee. (vii) The land owner farmer shall have no right or lien over the agriculture produce. Therefore, from the above it is clearly established that the assessee has effective control over the land. The land is used exclusively for the agricultural activities conducted by the assessee and the farmer works as per the supervision of the assessee. The ownership of the entire produce also belongs to the assessee. Therefore, the contention of the assessing officer that t....
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....eds Pvt Ltd. vs DCIT. The case of the assessee is distinguishable from the decision of the Hon'ble High Court, as follows: Sl. No. Facts related to the Assessee Facts related to M/s Namdhari Seeds Pvt. Ltd. 1. Land taken on lease and paid lease rent Rs. 21,21,99,659/-. Therefore, actively taken possession and control on agriculture land and carried out agriculture activity Land is not taken on lease and no lease rent is paid and no activity carried out on land 2. Cultivates the agriculture produces on their own and entire produces belongs to the assessee Purchases hybrid seeds, if only as per specification from farmers 3. Incurred entire cultivation expenses, Land Preparation Fertilizer & Pesticide Farm Expenses Labour Charges Not concerned with expenditure related to cultivation. 4. Entire risk of crop failure is with assessee Risk of quantity, quality, failure & cost remains with farmers 5. Various Courts have distinguished the decision of M/s Namdhari Seeds(Supra) in the case of: * Puransingh M. Verma v. CIT [2015] 56 taxmann.com 218 (Gujarat) * ACIT vs. Ajeet Seeds Ltd. (Ι.Τ.Α No. 20 of 2014) (Bombay HC....
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....ves human skill and labour on the land itself transforming the scientifically developed material into marketable produce through traditional cultivation methods. Therefore, the income ultimately derives from agriculture activity that undergo complete agricultural operations on land, the income is be treated as agricultural income. In fact, the decision of the Hon'ble Supreme Court in the case of CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC) favours the assessee, under consideration. 40. We note that on the identical and similar facts and nature of agriculture activities, various courts have considered such activities as agriculture activities and income is duly allowed as exempt u/s 10(1) of the I.T. Act, the reliance is placed on following decisions: (1) ACIT vs. Ajeet Seeds Ltd. (I.T.A No. 20 of 2014) (Bombay HC) The Assessing Officer held that growing breeder and foundation seeds would not be an agricultural activity and, therefore, they are not agricultural produce. The Hon'ble Court held that when breeder seeds and foundation seeds are grown successfully, lot of scientific help is required. The conditions are controlled and effect of nat....
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....11-12-Assessee-company was engaged in research, production and sale of agricultural/hybrid seeds - it entered into agreements with farmers to utilize their lands, under which farmers performed normal agronomic practices for production of seeds from foundation seeds supplied by assessee under its supervision and control Assessee claimed exemption under section 10(1)-Assessing Officer disallowed same on ground that production on lands owned by farmers could not be treated as agricultural operations carried on by assessee - It was noted that parent seeds were produced by way of agriculture and cultivation and cultivation was done under assessee's supervision and at its own costs and risks - Further, assessee played an active role of action of monitoring and nurturing plants cultivated by farmers - Whether since assessee was involved through farmers for production of hybrid yielding seeds for different types of hybridization and which were used for purpose of agriculture for deriving high yielding seeds, assessee was indirectly involved in said activity and, therefore, Tribunal was justified in allowing deduction under section 10(1) by taking income of assessee as an agricultural i....
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....en dealt with by Special Bench of Tribunal in Dy. CIT v. Inventaa Industries (P) Ltd. [2018] 95 taxmann.com 162/172 ITD 1 (Hyderabad -Trib.) (SB) wherein it was held that mushroom was an agricultural product raised from land and, thus, income derived from its sale was agricultural income Whether, following aforesaid decision, assessee's claim for treating cultivation and sale of white button mushroom as agricultural activity resulting in agricultural income exempted under section 10(1) was to be allowed - Held, yes [Para 9] [In favour of assessee] (6) Bayer Crop Science Ltd. Vs. DCIT (ITA NO. 3763/Mum./2015) (Mum.Trib.) Section 10(1), read with section 2(1A), of the Income-tax Act, 1961 Agricultural income (General) - Assessment years 2009-10 and 2012-13-Whether ownership or possession of land is not a pre-condition for claiming agricultural operations to be carried out under section 10(1) - Held, yes-Assessee was engaged in growing and selling of hybrid corn seeds jointly with help of farmers - During year, it earned income from said activity which was claimed as exempt under section 10(1) Assessing Officer denied claim of assessee primarily on basis that ass....
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.... assessee; in lieu of the said activities, the assessee agrees to pay the farmers compensation for land usage and reimbursement of cultivation expenses and service charges as per terms of the agreement and the entire risk and reward of growing the hybrid seeds, with regard to the said agricultural activities/cultivations, is entirely borne by the assessee. The Hon'ble High Court held that the seed is a product of agricultural activity. When such agricultural activity is conducted and seeds are produced, merely because such seeds were sold commercially, the basic agricultural operations also cannot be dubbed as 'commercial activities', and not 'agricultural activities. The court relied on M/s. Nuziveedu Seeds Ltd., and Prabhat Agri Biotech (supra), and dismissed the appeal filed by the Revenue. (9) M/s. Advanta India Ltd. Vs ACIT (ITA No. 819 & 820/Bang/2010) (Bang. Trib.) Section 2(1A) of the Income-tax Act, 1961 Agricultural income [Income from producing hybrid seeds) - Assessment years 2003-04 and 2004-05 - Whether definition of 'agriculture' given in section 2(1A) does not specify that produce should be fit for human consumption; only re....
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....arieties, such a lease would not ipso facto make operations of assessee as contract farming - Held, yes - Whether therefore, there was no illegality or irregularity in Commissioner (Appeals) deleting disallowance -Held, yes [Paras 16 to 18] [In favour of assessee] 41. Therefore, we note that the issue under consideration, is duly covered in favour of the assessee, by the above various decisions of various courts. The seeds and other agricultural production were produced by way of agriculture and cultivation and cultivation was done under assessee's supervision and at its own costs and risks. Further, the assessee played an active role of action of monitoring and nurturing plants cultivated by labourers/farmers. The land is used by the assessee himself, and the assessee does the agricultural activities himself. Hence, based on these facts and circumstances, we allow the ground raised by the assessee. 42. In the result, ground no.2 raised by the assessee, is allowed. 43. Ground No 3, raised by the assessee pertains to addition of Rs 23,643/- on account of unexplained cash credit u/s 68 of the Income Tax Act, 1961. 44. Brief facts, qua the issue are that during the yea....
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....Therefore, the addition u/s 68 of the Act is not justified and required to be deleted. In this regard, reliance is placed on the following decisions: (1) PCIT v. Yogendrakumar Gupta (152 taxmann.com 661) (Gujarat) Section 68 of the Income-tax Act, 1961 Cash credits (Loan) - Assessment year 2006-07 - Assessee was engaged in business of trading in shares and securities -Assessing Officer, on basis of information received that assessee had obtained accommodation entries in form of loan and advances from one 'B' Ltd treated loan as unexplained credit under section 68. On appeal, Commissioner (Appeals) deleted addition on finding that amount received as loan by assessee from 'B' Ltd, was through regular banking channels and assessee had proved identity of creditor and genuineness of transactions, which had been further strengthened by filing confirmation from creditor. On further appeal, Tribunal found that assessee had furnished copy of audited accounts, balance sheet and Profit and Loss account along with copy of ledger of 'B' Ltd and during course of assessment proceedings 'B' Ltd, categorically confirmed entry of certain sum with cop....
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....nsport, freight expenses, etc. The ld.Counsel submitted reconciliation and party- wise explanation with respect to each creditor, which is as under: Name Amount of Difference Remarks M/s Adarsh Trading Co. 3,67,166 The difference in the ledger account has arisen due to discount on purchases made. The assessee- company has recorded freight expenses in the ledger account i.e. debited the party account since the freight was to be paid by the party, whereas the creditor has not recorded freight amount in its ledger account. The ledger account is enclosed at page no. 155 M/s Harshad Trading Company 39,647 The difference in the ledger account has arisen due to discount on purchases made, vide paper book page No. 156 M/s Super Seeds Pvt. Ltd. 3,67,166 The closing balance as per books of accounts is Rs. 9,15,65,827/- and the balance confirmed by the party is Rs. 9,15,71,642/-. Therefore, there is a difference of Rs. 5815/-only. Thus, the Ld. assessing officer has wrongly calculated the difference of Rs. 3,67,166/-. The difference in the ledger account is on account of loss of goods. Out of the total value of goods, the assessee- company has receive....
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...., is allowed. 58. Ground No.5, of assessee pertains to addition of Rs. 6,444/-, u/s 40(a)(ia) of the Income Tax Act, 1961. The learned Counsel for the assessee informed the Bench that assessee does not wish to press this this ground, therefore we dismiss ground No.5, as not pressed. 59. In the result, ground No.5 raised by the assessee is dismissed, as not pressed. 60. Ground No. 1 has not been argued by both parties, hence, we dismiss the same. 61. In the combined result, appeal filed by the assessee is partly allowed to the extent indicated above. Order is pronounced in the open court on 13/04/2026. ============= Document 1 the supervision of the appellant. The ownership of the entire produce also belongs to the appellant. 4. Therefore, the contention of the AO that the appellant has failed to prove that it has substantive derivative interest in the land does not hold good 5. In this regards, we are also submitting screenshot of some of the clauses of the agreement 1 OBLIGATIONS OF THE FARMERSGROWER 212 --- ---------- --------------- ----------------------- Page 2 Para 6.1 & 6.2 The ownership contradiction and Payment at Market Rates 1.....