Test for Agricultural income - Whether lands are
to be owned by the assessee
Facts:
Assessee company was in the business of agrochemicals and
manufacturing genetically modified seeds. They had tied up with various
farmers for trying out genetically modified corn in AP and Karnataka. The
income from the same was claimed as agricultural income and exempt under
section 10(1). The case of the assessee has gone many rounds in the earlier
asst. years as well on the same topic of agricultural income. Alleging new facts
revenue claimed that the assessee was not the owner of the lands, nor were they
performing agricultural operations thus the income was held to be taxable by
both the AO and the CIT(A). On higher appeal -
Held in favour of the assessee that they were indeed
earning agricultural income and no where in the act it warrants that the
assessee needs to own lands. Even passive agricultural income earning
through leasing of lands or land revenue by way of leasing agricultural
land is also agricultural income. The case of the revenue was under appeal
before the Apex court on this same point. That does not mean that the benefit
should not be conferred on the assessee - thus held the ITAT. The decision of
Namdhari seeds case though reversed by the Karnataka high court cannot be read
into the assessee's case. In this Namdhari's case the departmental plea
before Kar HC was that the assessee had entered into "smart"
agreements with farmers to claim benefit of agricultural income. In the case of
the assessee also it was thus similar so the benefit of agricultural income
claim was to be negated thus canvassed revenue.
Applied:
Raja Benoy Kumar Sahas Roy in (1957) 32 ITR 466 (SC) :
1957 TaxPub(DT) 0152 (SC)
Maddi Venkatasubbayya in (1951) 20 ITR 151 (Mad-HC) :
1951 TaxPub(DT) 0095 (Mad-HC)
Associated Metal Co in (1989) 177 ITR 428 (All) : 1989
TaxPub(DT) 0890 (All-HC)
Indo American Exports in [ITA No.
1040/Bang/2002]
Namdhari Seeds Pvt. Ltd. in [ITA No.3102/Bang/2004]
CIT v. M/s Monsanto India Ltd. [ITA No.633 of 2010, dt.
5-8-2011]
Case: Bayer Crop
Science Ltd. v. Dy. CIT 2023 TaxPub(DT) 7100 (Mum-Trib)