Dy, Commissioner of Income Tax, Hyderabad V. M/s. Seed Innovations Pvt., Ltd., Hyderabad

ITA 1415/HYD/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0348 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-04-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 28-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: P MURALI MOHAN RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 1415/HYD/2013 ASSESSMENT YEAR: 2010-11 DY. COMMISSIONER OF INCOME TAX, DCIT,CIRCLE-3(1) HYDERABAD VS M/S. SEED INNOVATIONS PVT. LTD., MADHAPUR, HYDERABAD [PAN: AAICS0120J] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI RAJAT MITRA, DR FOR ASSESSEE : SHRI P. MURALI MOHAN RAO , AR DATE OF HEARING : 0 8 - 0 4 - 201 5 DATE OF PRONOUNCEMENT : 17 - 04 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS A REVENUE'S APPEAL AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX(APPEALS)-IV, HYDERABAD DATED 08-08-20 13 ON THE ISSUE OF ELIGIBILITY OF EXEMPTION U/S. 10(1) OF THE INCOME T AX ACT [ACT]. 2. ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF RESEARCH, CULTIVATION, PRODUCTION AND MARKETING OF HYBRID SEE DS. ASSESSEE HAS I.T.A. NO. 1415/HYD/2013 M/S. SEED INNOVATIONS PVT. LTD :- 2 -: CLAIMED AN AMOUNT OF RS.4,84,82,332/- AS EXEMPT INC OME ARISING OUT OF AGRICULTURE ACTIVITY IE. ACTIVITY UPTO SALE OF FOUN DATION SEEDS. FINAL STAGE OF TRADING OF HYBRID SEEDS WERE TREATED AS NON-AGRI CULTURE ACTIVITY AND CORRESPONDING INCOMES WERE OFFERED. IT HAD MAINTAI NED 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 I NCOME TAX, SUM OF RS.4,84,82,332/- WAS CLAIMED TO BE AGRICULTURAL INC OME AND SUM OF RS.2,79,54,190/- WAS ADMITTED AS INCOME FROM PROFIT S AND GAINS OF BUSINESS. AO HELD THAT PRODUCTION OF FOUNDATION SE EDS WAS NOT AN AGRICULTURE ACTIVITY AND DISALLOWED THE CLAIM U/S. 10(1). LD.CIT(A) FOLLOWING THE CO-ORDINATE BENCH DECISION OF THE ITA T, HYDERABAD IN THE CASE OF VIBHA AGROTECH LIMITED [314 ITR (AT) 234 (H YD] HELD THAT INCOME FROM SALE OF BASIC OR FOUNDATION SEEDS WAS AGRICULT URE ACTIVITY AND THEREFORE INCOME THERE ON WAS ELIGIBLE FOR EXEMPTIO N U/S. 10(1). ACCORDINGLY, HE ALLOWED ASSESSEE'S CLAIM, HENCE REV ENUE IS AGGRIEVED. 3. AFTER CONSIDERING RIVAL CONTENTIONS, WE DO NOT S EE 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 T HE 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 COVERE D BY THE DECISION OF THE COORDINATE BENCH IN ASSESSEES OW N 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. T HE RELEVANT FINDINGS OF THE COORDINATE BENCH ARE EXTRACTED BE LOW: 4. THE ISSUES RAISED IN THE REVENUE APPEALS HAS B EEN SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN A SSESSEES 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 M/S. SEED INNOVATIONS PVT. LTD :- 3 -: THE ASSESSEE WAS CARRYING ON AGRICULTURAL OPERATIO NS AND GROWING BASIC SEEDS ON THE LANDS. IT WAS NOT THE C ASE OF THE REVENUE THAT WITHOUT PERFORMING THE BASIC OPER ATIONS, THE SUBSEQUENT OPERATIONS HAD BEEN CARRIED ON BY T HE ASSESSEE. THE BASIC SEEDS WERE SOLD BY THE ASSESSE E ONLY AS A RESULT OF THE BASIC OPERATIONS THAT HAD BEEN CARRIED ON BY IT AND ON EXPENDING HUMAN SKILL AND LABOUR T HEREON AND ONLY AFTER PERFORMING OPERATIONS SUCH AS WEEDI NG, 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 RESU LT OF PRIMARY AS WELL AS SUBSEQUENT OPERATIONS INVOLVING HUGE SKILL AND EFFORTS AND THE INCOME THERE FROM WAS A GRICULTURAL INCOME AS PROVIDED U/S 2(1A) OF THE ACT TO EXEMPT ION U/S 10(1) OF THE ACT. THE ASSESSING OFFICER WAS TO TR EAT THE INCOME FROM BASIC SEEDS AS AGRICULTURAL INCOME AN D 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 DI SMISSED. 4. SINCE THE ISSUE UNDER CONSIDERATION IS IDENTICAL TO THE ISSUE DECIDED BY THE ITAT IN THE ABOVE SAID DECISION, RES PECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDER OF CIT(A) IN DIRECTING TH E 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 17 TH APRIL, 2015 SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. RAMA KOTAIAH) JUDICIAL MEMBER ACC OUNTANT MEMBER HYDERABAD, DATED 17 TH APRIL, 2015 TNMM I.T.A. NO. 1415/HYD/2013 M/S. SEED INNOVATIONS PVT. LTD :- 4 -: COPY TO : 1. O/ O . THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 3 (1), 7 TH 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