M/S. Seed Innovations Pvt., Ltd.,, ... vs Department Of Income Tax
- CitationI.T.A. No. 1415/HYD/2013
Ratio decidendi
The rule this decision rests on
The sale of basic or foundation seeds, where the seeds are grown on land by the assessee through primary and subsequent agricultural operations involving human skill and labour, constitutes agricultural income within the meaning of section 2(1A) and is therefore exempt under section 10(1). Where the agricultural operations are carried on by the assessee itself and the resulting produce is sold, the income so derived is not rendered non-agricultural merely because the produce is seed, and the claim for exemption under section 10(1) cannot be denied on that ground. Where the Tribunal has decided an identical issue in the assessee's own case for an earlier assessment year, following that decision is the appropriate course, and the appeal is dismissed accordingly.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
This is a Revenue's appeal against the order of the Commissioner of Income Tax(Appeals)-IV, Hyderabad dated 08-08-2013 on the issue of eligibility of exemption u/s. 10(1) of the Income Tax Act [Act].
2. Assessee is a company engaged in the business of research, cultivation, production and marketing of hybrid seeds. Assessee has I.T.A. No. 1415/Hyd/2013 :- 2 -: M/s. Seed Innovations Pvt. Ltd
claimed an amount of Rs.4,84,82,332/- as exempt income arising out of agriculture activity ie. activity upto sale of foundation seeds. Final stage of trading of hybrid seeds were treated as non-agriculture activity and corresponding incomes were offered. It had maintained common accounts for both the activities and arrived at Net Profit as per Books of Accounts at Rs.7,46,69,095/-. For the purpose of Income Tax, sum of Rs.4,84,82,332/- was claimed to be agricultural income and sum of Rs.2,79,54,190/- was admitted as income from profits and gains of business. AO held that production of foundation seeds was not an agriculture activity and disallowed the claim u/s. 10(1). Ld.CIT(A) following the co-ordinate bench decision of the ITAT, Hyderabad in the case of Vibha Agrotech Limited [314 ITR (AT) 234 (HYD] held that income from sale of basic or foundation seeds was agriculture activity and therefore income there on was eligible for exemption u/s. 10(1). Accordingly, he allowed assessee's claim, hence Revenue is aggrieved.
3. After considering rival contentions, we do not see any reason to interfere with the order of Ld.CIT(A). In the case of Vibha Agrotech Limited (supra), the ITAT considered the facts of the case and held as under:
"5. We have heard both the parties and perused the record as well as gone through the orders of the authorities below. We find that the issue is squarely covered by the decision of the Coordinate Bench in assessee's own case for AYs 2002-03, 2004-05 and 2005- 06 in ITA Nos. 469/H/2008 and others vide order dated 18/06/2010. A copy of the said order is available on record. The relevant findings of the coordinate bench are extracted below:
"4. 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 :
I.T.A. No. 1415/Hyd/2013 :- 3 -: M/s. Seed Innovations Pvt. Ltd
The assessee was carrying on agricultural operations and growing basic seeds on the lands. It was not the case of the Revenue that without performing the basic operations, the subsequent operations had been carried on by the assessee. The basic seeds were sold by the assessee only as a result of the basic operations that had been carried on by it and on expending human skill and labour thereon and only after performing operations such as weeding, watering, manuring, etc. the resultant product was 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 and the income there from was agricultural income as provided u/s 2(1A) of the Act to exemption u/s 10(1) OF THE Act. The assessing officer was to treat the income from basic seeds as agricultural income and allow exemption u/s 10(1) of the Act.
5. In view of the above order of the Tribunal, we are inclined to agree with the findings of the CIT(A) on this issue and accordingly the appeals of the Revenue are dismissed."
4. Since the issue under consideration is identical to the issue decided by the ITAT in the above said decision, respectfully following the same, we uphold the order of CIT(A) in directing the AO to treat the income of Rs.4,84,82,332/- claimed as agricultural income and allow exemption u/s. 10(1) on the same.
5. In the result, appeal is dismissed.
Order pronounced in open Court on 17th April, 2015
Sd/- Sd/-
(ASHA VIJAYARAGHAVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated 17th April, 2015
TNMM I.T.A. No. 1415/Hyd/2013 :- 4 -: M/s. Seed Innovations Pvt. Ltd
Copy to :
1. O/o. The Dy. Commissioner of Income Tax, Circle-3(1), 7th Floor, B-Block, IT Towers, Hyderabad.
2. M/s. Seed Innovations Pvt. Ltd., "Inspire", Plot No.21, HUDA's Techno Enclave, Madhapur, Hyderabad.
3. CIT(Appeals)-IV, Hyderabad
4. CIT-III, Hyderabad
5. D.R. ITAT, Hyderabad
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free