M/s Namdhari Seeds Pvt. Ltd., Bangalore V. ACIT, Bangalore

ITA 1231/BANG/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5378 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-04-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 29-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JASON P BOAZ CITI
• Keywords: Business income
• Section: 143(3); 154

Judgement Text

PAGE 1 OF 5 ITA N O.1231/BANG/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A' BEFORE DR. O K NARAYANAN, VICE PRESIDENT AND SHRI GEORGE GEORGE K, J.M. ITA NO.1231/BANG/09 (ASST. YEAR 2000-01) M/S NAMDHARI SEEDS PVT. LTD., URAGAHALLI VILLAGE, BIDAI POST, BANGALORE-9. - APPELLANT VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-12(21), BANGALORE. - RESPONDENT APPELLANT BY : SMT. SHEETAL, ADVOCATE RESPONDENT BY : SHRI JASON P BOAZ, CIT-I O R D E R PER GEORGE GEORGE : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE CIT(A)'S ORDER DATED 20.2.2009 IN RELATION TO ASST. YEAR 200 0-01. THE ORDER OF THE CIT(A) EMANATES FROM THE ORDER GIVING EFFECT TO THE ORDER OF CIT(A) CUM ORDER U/S 154 DATED 24.8.2007. 2. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS:- THE ASSESSEE IS A PRIVATE LIMITED COMPANY. IT IS ENGAGED IN THE BUSINESS OF GROWING AND PROCESSING OF HYBRID SEEDS. ASSESSMENT U/S 143(3) WAS COMPLETED ON 22.3.2006 WHEREIN, THE ASSESSING OFFICER PAGE 2 OF 5 ITA N O.1231/BANG/2009 2 HAD BROUGHT TO TAX THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AS BUSINESS INCOME. 3. ON APPEAL, THE CIT(A), FOLLOWING THE DECISION O F THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NO.3102/BANG /2004 DATED 14.7.2006 FOR THE ASST. YEAR 2001-02 HELD THAT INCO ME ARISING OUT OF CONTRACT FARMING WAS AGRICULTURAL INCOME AND INCOME ARISING OUT OF PROCESSING AND CONVERTING HYBRID SEEDS INTO CERTIFI ED SEEDS WAS TO BE TREATED AS BUSINESS INCOME. CONSEQUENT TO THE ORDE R OF THE CIT(A), THE ASSESSING OFFICER PASSED AN ORDER GIVING EFFECT TO THE ORDER OF THE CIT(A) AND IN THE SAME ORDER, SIMULTANEOUSLY PASSED AN ORDER U/S 154 OF THE ACT DETERMINING THE INCOME OF THE ASSESSEE U /S 115JA OF THE ACT. 4. BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS SU BMITTED THAT THE ASSESSING AUTHORITY OUGHT TO HAVE APPRECIATED T HAT THERE IS NO MISTAKE APPARENT FROM RECORD AND HIS ACTION OF INVO KING THE PROVISIONS OF SECTION 154 TO LEVY TAX ON ASSESSEE UNDER THE PR OVISIONS OF SECTION 115JA IS WITHOUT LEGAL SANCTION. IT WAS FURTHER SU BMITTED, THE ASSESSING AUTHORITY SHOULD HAVE APPRECIATED THAT WHEN COMPUTI NG THE BOOK PROFITS UNDER THE PROVISIONS OF SECTION 115JA, HE OUGHT TO HAVE REDUCED THE AGRICULTURAL INCOME FROM THE NET PROFITS, AS SHOWN IN THE P&L ACCOUNT, IN VIEW OF EXPLANATION 2 TO SECTION 115JA OF THE AC T. 5. AS REGARDS THE PRELIMINARY ISSUE THAT THE PROCE EDINGS U/S 154 CANNOT BE INVOKED FOR THE PURPOSE OF COMPUTATIO N OF MAT LIABILITY, THE CIT(A) HELD THAT THE PROVISIONS OF S ECTION 115JA BEING MANDATORY, THERE CANNOT BE A DEBATE ON ITS APPLICAB ILITY ON THE ASSESSEE PAGE 3 OF 5 ITA N O.1231/BANG/2009 3 COMPANY, THEREBY REJECTING THE ASSESSEE'S CONTENTIO N, NAMELY, INVOKING THE PROVISIONS OF SECTION 115JA IN A PROCEEDINGS U/ S 154 WAS A DEBATABLE ISSUE AND WAS NOT PERMISSIBLE. AS REGA RDS THE ISSUE ON MERITS, THE CIT(A) HELD THAT ' IN DETERMINING THE BOOK PROFIT OF THE APPELLANT FOR THE PURPOSE OF COMPUTING INCOME U/S 1 15JA, THE AO IS DIRECTED TO REDUCE THE APPELLANT'S AGRICULTURAL INC OME (DETERMINED AS PER ORDER OF CIT(A)) FROM THE NET PROFIT OF THE APP ELLANT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS Y EAR PREPARED U/S 115JA(2)'. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING EFFECTIVE GR OUNDS:- II) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE PROCESSING ACTIVITY UNDERTAKEN BY THE APPELLANT ON THE SEEDS WAS A PROCESSING ORDINARILY EMPLOYED BY THE CULTIVATOR TO MAKE THE SEEDS FIT TO BE TAKEN TO THE MARKET. III) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE PROCESS OF CONVERTING THE HYBRID SEEDS BY CERTIFICATION AND TREATMENT WITH THIRAM WAS A PROCESS ORDINARILY EMPLOYED AND A STATUTORY REQUIREMENT TO MAKE THE SEEDS FIT TO BE TAKEN TO TH E MARKET AND CONSEQUENTLY THE SAME WAS LIABLE TO BE TREATED ONLY AS AGRICULTURAL INCOME. IV) WITHOUT PREJUDICE, THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING AUTHORITY TO QUANTIFY THE N ET PROFIT AT 10% FROM THE PROCESSING ACTIVITY, TREATIN G IT AS BUSINESS INCOME. 7. AT THE VERY OUTSET, THE LEARNED DR SUBMITTED TH AT THE GROUNDS RAISED BY THE ASSESSEE IS NOT CONNECTED WIT H THE ISSUE ARISING PAGE 4 OF 5 ITA N O.1231/BANG/2009 4 FROM THE IMPUGNED ORDER OF THE CIT(A) DATED 20.2.20 09. THE ISSUE THAT WAS CONSIDERED BY THE CIT(A) IN HIS ORDER DATED 20. 2.2009 WAS THE AO, JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 115 JA OF THE ACT AND RAISING A DEMAND OF RS.43,21,239/- IN A RECTIFICATI ON PROCEEDINGS U/S 154 OF THE ACT. IT WAS SUBMITTED BY THE LEARNED DR THAT THE ASSESSEE IN THE GROUNDS HAS CHALLENGED THE CIT(A)'S CONFIRMATIO N OF AO'S ACTION IN TREATING 10% OF AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AS BUSINESS INCOME. IT WAS FURTHER SUBMITTED THAT THI S ISSUE ARISE OUT OF THE CIT(A)'S ORDER DATED 28.9.2006 AND NOT OUT OF T HE IMPUGNED ORDER DATED 20.2.2009. 8. ON THE OTHER HAND, THE LEARNED AR WAS NOT ABLE TO CONTROVERT THE CONTENTION RAISED BY THE LEARNED DR. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. AS RIGHTLY POINTED OUT BY THE LEARNED DR, THE GROUNDS RAISED IN THIS APPEAL DOES NOT ARISE OUT OF THE IMPUGNED ORDER OF THE CIT(A) DATED 20.2.2009; HENCE, THE GROUNDS A GITATED BEFORE US ARE REJECTED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS DISMISSED. THE ORDER IS PRONOUNCED ON .26TH..APRIL, 2010 SD/- SD/- (DR. O K NARAYANAN) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBE R BANGALORE, DT.26/4/2010 PAGE 5 OF 5 ITA N O.1231/BANG/2009 5 COPY TO : 1. THE ASSESSEE 2.THE REVENUE 3. THE CIT(A) CONCE RNED. 4. THE CIT CONCERNED. 5. THE DR 6. GUARD FILE. 7. GF, ITAT, NEW DELHI. MSP/15.4. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.