DCIT, Bangalore V. M/s Advanta India Ltd., Secunderabad

ITA 227/BANG/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51311 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ETWA MUNDA CITIII
• Section: 260A

Judgement Text

PAGE 1 OF 5 ITA NO.227/BANG/2011 1 INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BEFORE SHRI N K SAINI, ACCOUNANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.227/BANG/2011 (ASST. YEAR 2006-07) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(1), BANGALORE. - APPELLANT VS M/S ADVANTA INDIA LTD., UNICORN HOUSE, PLOT NO.3-5, 157/5, BALAJI ENCLAVE, TRANSPORT ROAD NEWAR, GUNROCK, DIAMOND POINT, SECUNDERABAD-09. - RESPO NDENT PA NO.AACCA 7700L DATE OF HEARING : 10/10/2011 DATE OF PRONOUNCEMENT : 10/10/2011 APPELLANT BY : SHRI ETWA MUNDA, CIT-III RESPONDENT BY : NONE O R D E R PER GEORGE GEORGE K : THIS APPEAL INSTITUTED BY THE DEPARTMENT IS DIRECT ED AGAINST THE ORDER OF THE CIT(A)-I, BANGALORE DATED 03/12/20 10.. THE RELEVANT ASST. YEAR IS 2006-07. 2. THE EFFECTIVE GROUNDS RAISED BY THE REVENUE READ S AS FOLLOWS:- I) THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.3,01,50,805/- MADE ON ACCOUNT OF DISALLOWANCE OF PAGE 2 OF 5 ITA NO.227/BANG/2011 2 EXEMPTION CLAIMED U/S 10(1) OF THE I T ACT, 1961, I N RESPECT OF INCOME DECLARED BY THE ASSESSEE AS AGRICULTURAL INCOME, WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES UNDER WHICH THE ADDITION WAS MADE BY T HE AO. II) THE LEARNED CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE PROFIT ARISING FROM FOUNDATION SEEDS OR HYBRID SEEDS PRODUCED ON OWN LAND OR LANDS TAKEN ON LEASE WILL CONSTITUTE AGRICULTURAL INCOME AND GIVING RELIEF TO THE ASSESSEE. III) THE LEARNED CIT(A) HAS ERRED IN FOLLOWING THE DECIS ION OF THE HONBLE ITAT WITHOUT APPRECIATING THAT THE ABOV E DECISION WAS NOT ACCEPTED BY THE DEPARTMENT AND AN APPEAL HAS BEEN FILED BEFORE THE HONBLE HIGH COURT U/S 260A OF THE I T ACT, 1961. 3. BRIEFLY STATED THE FACTS ARE AS FOLLOWS:- THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND PRODUCTION OF BASIC SEEDS AND HYBRID SEEDS. THE ASSESSEE COMPANY IS ALSO CARRYING OUT RESEARCH ACTIVITY IN FARM ING. FOR THE CONCERNED ASST. YEAR, RETURN OF INCOME WAS FILED ON 27 TH NOVEMBER, 2006 DECLARING AN INCOME OF RS.3,19,29,709/-. THE ASSESSEE HAD SHOWN GROSS RECEIPTS OF RS.5,23,84,326/- FROM THE PRODUCTION AND SALE OF 50 ,814 KGS OF VARIOUS HYBRID SEEDS OF MAIZE, SUNFLOWER, PADDY, MUSTARD ETC. AFTER DEDUCTION OF EXPENDITURE OF RS.2, 22,33,521/-, THE ASSESSEE COM PANY CLAIMED EXEMPTION U/S 10(1) R.W.S. 2(1A) OF RS.3,01,50,805/-. THE AO WHILE COMPLETING THE SCRUTINY ASSESSMENT DENIED THE ASSESSEES CLAIM THAT THE NET AMOUNT OF RS.3,01,50,805/- RECEIVED ON SALE OF SEEDS WERE AGR ICULTURAL INCOME. THE AO ADDED THE SAME TO THE TOTAL INCOME DECLARED BY TH E ASSESSEE. PAGE 3 OF 5 ITA NO.227/BANG/2011 3 4. AGGRIEVED BY THE SCRUTINY ASSESSMENT COMPLETED, T HE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY. 5. BEFORE THE FIRST APPELLATE AUTHORITY IT WAS SUBM ITTED THAT THE AO ERRED IN HOLDING THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE ARE NOT AGRICULTURAL ACTIVITIES AND THE INCOME ARISING THER EFROM IS NOT IN THE NATURE OF AGRICULTURAL INCOME IN ACCORDANCE WITH SECTION 2 (1A) OF THE ACT. ALTERNATIVELY IT WAS CONTENDED THAT THE AO IS ERRED IN NOT APPRECIATING THE FACT THAT THE ACTIVITY OF THE ASSESSEE COMPANY UPTO T HE BASIC SEED IS AN AGRICULTURAL ACTIVITY AND ACCORDINGLY, THE INCOME ARI SING THEREFROM OUGHT TO BE EXEMPT U/S 10(1) OF THE ACT. 6. THE FIRST APPELLATE AUTHORITY, FOLLOWING THE OR DER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASST. YEAR 2 002-03 REPORTED IN (2010) 5 ITR (TRIB) 57, ALLOWED THE APPEAL OF THE A SSESSEE. 7. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 8. WHEN THE MATTER WAS TAKEN UP FOR HEARING, THE L EARNED DR FILED AN ADJOURNMENT LETTER. THE CONTENTS OF THE S AME READS AS FOLLOWS:- THE ABOVE CASE IS POSTED FOR HEARING ON 10/10/2011 . THE CONNECTED APPEALS IN ITA NOS.824 & 825 AND ITA NOS.819 & 820 IN THE ABOVE CASE ARE POSTED FOR HEAR ING ON 23/11/2011, THEREFORE, IT IS REQUESTED THAT THE ABOVE REFERRED APPEAL ITA NO.227/B/11 MAY ALSO BE COMBINED AND POSTED FOR 23/11/11 FOR THE SAKE OF CONVENIENCE . SINCE WE NOTICED THAT THE ISSUE IN QUESTION IS COVE RED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2002-03, WE REJECT THE ADJOURNMENT PAGE 4 OF 5 ITA NO.227/BANG/2011 4 APPLICATION FILED ON BEHALF OF THE DEPARTMENT AND P ROCEEDED TO DISPOSE OF THE CASE ON MERITS. 9. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. 10. WE HAVE PERUSED THE MATERIAL ON RECORD. THE T RIBUNAL IN ASSESSEES OWN CASE CITED SUPRA HAD OBSERVED THUS:- THE PRODUCTION OF BASIC SEEDS AS WELL AS HYBRID SEED S WAS THE RESULT OF BASIC AGRICULTURAL OPERATIONS CARRIED OUT BY THE ASSESSEE COMPANY ON ITS OWN LAND AS WELL AS ON LEASEHOLD LAND. THE METHOD OF CONTRACT FARMING DID NOT TAKE AWAY THE CHARACTER OF THE BASIC OPERATIONS CARR IED OUT BY THE ASSESSEE WHICH WERE AGRICULTURAL IN NATUR E. MERELY BECAUSE, THE BASIC SEEDS WERE SOWN IN LEASEHO LD LAND AND THE MANPOWER REQUIRED WAS ARRANGED THROUGH CONTRACT FARMING, THE OPERATIONS CARRIED OUT BY THE ASSESSEE COULD NOT BE HELD AS NON-AGRICULTURAL OPER ATIONS. THE ASSESSEE HAD CARRIED OUT BASIC AS WELL AS SECON DARY AGRICULTURAL OPERATIONS. THE ENTIRE INCOME OF THE ASSESSEE WAS AGRICULTURAL IN NATURE WHICH WAS TO BE EXCLUDED FROM THE TOTAL INCOME. THE FACTS THAT THE ASSESSEE WAS FOLLOWING INTERNATIONAL TECHNOLOGY, MARKETING EXPERTISE, INTEGRATED SCIENTIFIC AND COMMERCIAL ACTIVITY WHICH WERE CITED BY THE ASSESSIN G OFFICER AS REASONS FOR DENIAL OF EXEMPTION DID NOT HAVE ANY ROLE IN DECIDING THE NATURE OF INCOME WITHIN THE FRAMEWORK OF THE ACT . 10.1 THE FACTS FOR THE CONCERNED ASST. YEAR BEING I DENTICAL WITH THE FACTS CONSIDERED BY THE TRIBUNAL FOR THE ASST. YEAR 2 002-03, WE ARE BOUND TO FOLLOW THE ORDER OF THE TRIBUNAL IN ASSESSEES O WN CASE CITED SUPRA. THEREFORE, WE UPHOLD THE ORDER OF THE CIT(A) AS COR RECT AND IN ACCORDANCE WITH LAW AND DECIDED THE MATTER IN FAVOUR OF THE AS SESSEE. PAGE 5 OF 5 ITA NO.227/BANG/2011 5 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH DAY OF OCTOBER, 2011 SD/- SD/- (N K SAINI) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO:- 1.THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCE RNED 4. THE CIT(A) CONCERNED 5. THE DR 6. GF MSP/- BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.