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

ITA 1234/BANG/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5377 (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: 2004-2005
• 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); 115JB; 154

Judgement Text

PAGE 1 OF 5 ITA N O.1234/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.1234/BANG/09 (ASST. YEAR 2004-05) 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 2004-05. THE IMPUGNED ORDER OF THE CIT(A) EMANATES FROM THE ORDER GIVING EFFECT TO THE ORDER OF CIT(A) CUM ORDER U/S 154 DAT ED 2.8.2007. 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 O F HYBRID SEEDS. ASSESSMENT U/S 143(3) WAS COMPLETED ON 22.3.2006 WH EREIN, THE PAGE 2 OF 5 ITA N O.1234/BANG/2009 2 ASSESSING OFFICER HAD BROUGHT TO TAX THE AGRICULTUR AL 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 HAD DIRECTED T HAT THE NET PROFIT ARISING OUT OF CONTRACT FARMING WAS AGRICULTURAL IN COME AND INCOME ARISING OUT OF CONVERSION OF HYBRID SEEDS INTO CERT IFIED SEEDS WAS TO BE TREATED AS BUSINESS INCOME. CONSEQUENT TO THE O RDER OF THE CIT(A), THE ASSESSING OFFICER PASSED AN ORDER GIVIN G EFFECT TO THE ORDER OF THE CIT(A) AND IN THE SAME ORDER, SIMULTAN EOUSLY PASSED AN ORDER U/S 154 OF THE ACT DETERMINING THE INCOME OF THE ASSESSEE U/S 115JB OF THE ACT. [BOTH ASSESSEE AND ASSESSING OFFICER HAD ERRONEOUSLY REFERRED TO SECTION 115JA, WHEREAS THE CORRECT SECTION FOR THIS YEAR IS 115JB]. 4. BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS SU BMITTED THAT THE ASSESSING AUTHORITY OUGHT TO HAVE APPRECIA TED THAT THERE IS NO MISTAKE APPARENT FROM RECORD AND HIS ACTION OF I NVOKING THE PROVISIONS OF SECTION 154 TO LEVY TAX ON ASSESSEE U NDER THE PROVISIONS OF SECTION 115JB IS WITHOUT LEGAL SANCTI ON. IT WAS FURTHER SUBMITTED, THE ASSESSING AUTHORITY SHOULD H AVE APPRECIATED THAT WHEN COMPUTING THE BOOK PROFITS UNDER THE PROV ISIONS OF SECTION 115JB, HE OUGHT TO HAVE REDUCED THE AGRICUL TURAL INCOME FROM THE NET PROFITS, AS SHOWN IN THE P&L ACCOUNT, IN VIEW OF EXPLANATION 2 TO SECTION 115JB OF THE ACT. PAGE 3 OF 5 ITA N O.1234/BANG/2009 3 5. AS REGARDS THE PRELIMINARY ISSUE THAT THE PROCE EDINGS U/S 154 CANNOT BE INVOKED FOR THE PURPOSE OF COMPUT ATION OF MAT LIABILITY, THE CIT(A) HELD THAT THE PROVISIONS OF S ECTION 115JB BEING MANDATORY, THERE CANNOT BE A DEBATE ON ITS AP PLICABILITY ON THE ASSESSEE COMPANY. AS REGARDS THE ISSUE ON MERI TS, THE CIT(A) HELD THAT ' IN DETERMINING THE BOOK PROFIT OF THE APPELLANT FOR THE PURPOSE OF COMPUTING INCOME U/S 115JB, THE AO IS DI RECTED TO REDUCE THE APPELLANT'S AGRICULTURAL INCOME (DETERMI NED AS PER ORDER OF CIT(A)/HON'BLE ITAT)FROM THE NET PROFIT OF THE APPELLANT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE REL EVANT PREVIOUS YEAR PREPARED U/S 115JB(2)'. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING EFFECTIVE GROUNDS:- 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 THE 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 NET PROFIT AT 10% FROM THE PROCESSING ACTIVITY, TREATING IT AS BUSINESS INCOME. PAGE 4 OF 5 ITA N O.1234/BANG/2009 4 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 FROM THE IMPUGNED ORDER OF THE CIT(A) DATED 20.2.2009. THE CIT(A) IN HIS ORDER DATED 20.2.2009 WAS CONSIDE RING THE ISSUE, NAMELY, WHETHER THE AO WAS JUSTIFIED IN INVOKING TH E PROVISIONS OF SECTION 115JB OF THE ACT AND RAISING A DEMAND OF RS .1,02,27,096/- IN A RECTIFICATION PROCEEDINGS U/S 154 OF THE ACT. IT WAS SUBMITTED BY THE LEARNED DR THAT THE ASSESSEE IN THE GROUNDS HAS CHALLENGED THE AO'S ACTION IN TREATING 10% OF AGRICULTURAL INC OME DECLARED BY THE ASSESSEE AS BUSINESS INCOME. 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 GRO UNDS AGITATED 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 MEMBER BANGALORE, DT.26/4/2010 PAGE 5 OF 5 ITA N O.1234/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/16.4. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.