Tripta Anand, Secunderabad vs Assessee

This is an appeal by the assessee against the order dated 15-09-2012 of Ld. Commissioner of Income Tax (Appeals)-VI, Hyderabad for the Assessment Year (AY) 2009-10. The first issue raised by the assessee relates to the finding of Ld.CIT(A) that the receipt from sale of seeds is not agricultural income.

2. Briefly the facts relating to this issue are, assessee is an individual. For the assessment year under consideration, assessee filed her return of income on 05-09-2009 declaring total income at Rs. 1,94,900/-besides agricultural income of Rs. 27,09,018/-. While examining the agricultural income declared by the assessee, it was :- 2 -: I.T.A. No. 1688/Hyd/2012 Tripta Anand

found by the Assessing Officer (AO) that assessee exports tomato seeds receipts from which has been treated as 'agricultural income'. When the assessee was called upon to establish the agricultural income, it was submitted by her that she along with her husband, who is a scientist, have developed hybrid tomato seeds by taking on lease agricultural lands at Rannebur, in the state of Karnataka. She submitted that the said seeds are exported to Canada. Hence, the income derived is declared as 'agricultural income'. When the AO called upon the assessee to submit the lease agreements for the lands claimed to have been taken on lease along with other documentary evidences in support of her claim, as observed by the AO, the assessee submitted a note stating the method of producing hybrid tomato seeds, the AO on perusing the submissions of the assessee observed that the activity undertaken by the assessee cannot be considered as an agricultural activity since such activity is not undertaken by a normal cultivator. He further observed that the assessee failed to produce any evidence to show that she has undertaken the agricultural activity. The AO observed that the basic activity undertaken by the assessee is just procuring the seeds from the farmers and selling the same to intending buyers. AO observed that the entire payments have been made by the assessee to an agent. AO also observed that assessee does not own any agricultural land for carrying out such activity. He observed, even the assessee failed to furnish copy of a single lease agreement of the agricultural land. On the basis of the aforesaid fact, the AO finally concluded that the assessee's claim of agricultural income from sale of tomato seeds is not acceptable and accordingly treated the amount of Rs. 27,09,018/- as 'business income' of the assessee. Being aggrieved of the addition made, assessee preferred appeal before the First Appellate Authority. As far as AO's observation that the activity of cultivating tomato seeds in the particular method adopted cannot be considered to be a simple agricultural :- 3 -: I.T.A. No. 1688/Hyd/2012 Tripta Anand

activity, the Ld.CIT(A) did not agree with the same. However, Ld.CIT(A) on the basis of material available on record noted that there is no evidence submitted by the assessee to establish that she has taken land on lease nor there is any evidence to indicate that assessee has carried out the agricultural operations. The Ld.CIT(A) observed that though it may be a fact that the assessee might have supplied the seeds etc., and may have been directly involved in the technical and day to day supervision of the agricultural activities, but she could not establish that the agricultural operations were actually carried on by her through hiring of labour and lease of land. She observed that the facts on record, on the contrary, indicate that the relationship of the assessee with the farmers was that of a purchaser of seeds which in turn were exported to Canada. Accordingly, Ld.CIT(A) rejected assessee's claim of agricultural income.

3. Ld. AR more or less reiterating the submissions made before the departmental authorities submitted that the assessee has taken lease of agricultural land from the farmers and carried out agricultural activity of growing tomato seeds on the said land herself. Therefore, the income derived from the sale/export of said seeds has to be treated as 'agricultural income'. Ld. AR submitted, though it is a fact that assessee has taken on lease the agricultural land from farmers, there is neither any lease agreement nor confirmation given by the concerned farmers as the farmers are not willing to either enter into a lease agreement or give any confirmation. The Ld. AR submitted however, it is a fact that the assessee has taken lease of agricultural lands from a number of farmers and carried out the activity of growing tomato seeds. In this context, he referred to an affidavit of the assessee accompanied by a list showing the details of land claimed to have been taken on lease from farmers for the agricultural operations.

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4. Ld. DR on the other hand strongly supporting the order of the First Appellate Authority and AO submitted before us that, at no stage, the assessee could furnish any evidence to establish the fact that she has taken lease of agricultural lands for carrying out agricultural activity. Therefore, since the most basic thing required for conducting agricultural activity is not available with the assessee, the claim of agricultural income cannot be accepted.

5. We have considered the submissions of the parties and perused the materials on record. Undisputedly though the assessee has claimed that it has taken on lease agricultural land from a number of farmers, but she has not been able to produce a single piece of evidence to establish such claim. No lease deed or confirmation from a single farmer has been produced to demonstrate the fact that the assessee has taken lease of agricultural land from farmers for carrying out the so called agricultural activity of growing tomato seeds. There is also no evidence on record that lease rents were paid to the concerned persons. On the contrary, as rightly observed by Ld.CIT(A), the material on record clearly prove that the assessee has purchased seeds from the farmers, though, it may be a fact that such growing of tomato seeds was carried out on the technical supervision of the assessee. However, that does not take away from the basic fact that the actual agricultural activity was carried on by the farmers and the assessee merely purchased the seeds cultivated by the farmers in the land owned by them. At no stage, the assessee has proven the fact that agricultural land was either taken on lease by the assessee or she herself has carried out the agricultural activity employing the farmers owning such agricultural land or by employing outside labour. Before us, Ld. AR filed an affidavit of assessee stating that she has conducted the cultivation activity. A list has been enclosed to the affidavit showing the name of farmers and :- 5 -: I.T.A. No. 1688/Hyd/2012 Tripta Anand

details of land claimed to have been taken on lease. We are unable to accept assessee's claim in the affidavit for two reasons, firstly because no such affidavit was filed either before the AO or before Ld.CIT(A) and secondly because when a query was made by the bench to Ld. AR, whether the assessee can produce any lease deed or confirmation from concerned farmers or at least can produce a few of the farmers to prove the fact of taking on lease their land for cultivation purpose, he expressed inability of assessee to do so and requested the Bench to decide the issue on the basis of material available on record. Therefore, when assessee has failed to bring any corroborative evidence on record to prove the fact that assessee is either owning or has taken on lease agricultural land, which is the basic requirement for carrying out agricultural activity, the affidavit filed is merely a self serving document, hence, cannot be taken into cognizance. Therefore, considering the fact that the assessee has failed to prove her claim of agricultural income with adequate supporting evidences, the assessment of said income under the head 'business' has to be upheld. Accordingly, this ground is dismissed.

6. The next issue raised in ground No. v and vi relates to treating the Breeder Shed Rent and farm rent amounting to Rs. 1,52,569/- and Rs. 2,30,000/- respectively, as 'income from business' instead of 'income from house property'. During the assessment proceedings, the AO noticed that the assessee was earlier engaged in the poultry farming business. However, during the year under consideration, assessee has received an amount of Rs. 1,52,569/- from M/s. Venkateshwara Hatcheries Limited towards Breeder Shed Rent which she failed to disclose in her return of income. The AO therefore treated the rent received from M/s. Venkateshwara Hatcheries Limited as 'income from business'. Though the assessee before the First Appellate Authority :- 6 -: I.T.A. No. 1688/Hyd/2012 Tripta Anand

submitted that the rent received from the Breeder Shed should be treated as 'income from house property', but Ld.CIT(A) rejected such claim of the assessee observing that there is no evidence submitted by the assessee to show that she has closed down her poultry business. Accordingly, she held that the rent received should be treated as 'income from business'.

7. At the time of hearing before us, Ld. AR has not advanced any specific argument on the aforesaid issues. However, after going through the materials on record, we do not find any infirmity in the order of Ld.CIT(A) in holding that the Breeder Shed rent of Rs. 1,52,569/- is to be treated as 'income from business' as the assessee has not proved the fact that she has closed down her poultry business. As far as the amount of Rs. 2,30,000/- is concerned, on perusal of assessment order, we find that there is no such addition made by the AO. Before us also the assessee has not advanced any argument on the issue. Accordingly, ground raised is dismissed.

8. In the result, assessee's appeal is dismissed.

Order pronounced in open Court on 20th May, 2015.

Sd/- Sd/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER

Hyderabad, Dated 20th May, 2015

TNMM :- 7 -: I.T.A. No. 1688/Hyd/2012 Tripta Anand

Copy to :

1. Tripta Anand, C/o. V.M. Chakrapani & Co., Chartered Accountants, 5-5-8/9 & 10, II Floor, Srinivasa Building, Ranigunj, Secunderabad.

2. The Income Tax Officer, Ward-11(4), Hyderabad.

3. CIT(Appeals)-VI, Hyderabad.

4. CIT-V, Hyderabad.

5. D.R. ITAT, Hyderabad