The DCITNavsari Circle, Navsari V. Best Roses Biotech Pvt.Ltd.,

ITA 3153/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67857 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-10-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 29-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: A M TALSANIA
• Keywords: Business income; Opportunity of being heard; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMADABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 3153/AHD/2010 ASSESSMENT YEAR :2007-08 DY. COMMISSIONER OF INCOME- TAX, NAVSARI CIRCLE, NAVSARI. V/S . BEST ROSES BIOTECH PVT. LTD., AT VILLAGE KUCHED, TAL: JALAPORE, DIST: NAVSARI. PAN NO. A A BCB7116Q (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI O. P. BATHEJA, SR. D.R. /BY RESPONDENT SHRI A. M. TALSANIA, A.R. /DATE OF HEARING 10.10.2013 /DATE OF PRONOUNCEMENT 25.10.2013 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF REVENUE WHICH HA S EMANATED FROM THE ORDER OF CIT(A), VALSAD, DATED 30.07.2010 FOR A SSESSMENT YEAR 2007-08. THE SOLE GROUND OF APPEAL IS AGAINST ALLOWING THE C LAIM OF THE ASSESSEE FOR EXEMPTION U/S. 10(1) OF THE ACT. 2. THE A.O. OBSERVED THAT THE ASSESSEE COMPANY HAS SHOWN RS.17,44,912/- AS BUSINESS INCOME BUT IN COMPUTATI ON IT HAS BEEN CLAIMED DEDUCTION U/S. 10(1) OF THE IT ACT ON ACCOUNT OF AG RICULTURE INCOME. THE A.O. GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE. THE ASSESSEE SUBMITTED REPLY BEFORE THE A.O. AND CONTENDED AS UN DER: [4] THE ASSESSEE IS A PRIVATE LIMITED COMPANY REGI STERED UNDER THE COMPANIES ACT, INCORPORATED W.E.F. 18/02/2002. IT IS ALSO REGISTERED UNDER THE AGRICULTURE AND PROCESSED FOOD PRODUCTS ITA NO. 3153/AHD/10 A.Y. 07-08 PAGE 2 EXPORT DEVELOPMENT AUTHORITY, MINISTRY OF COMMERCE, GOVT. OF INDIA AND HAS BEEN ALLOTTED WITH AGRI. BUSINESS REGISTRAT ION NUMBER FROM GUJARAT AGRO INDUSTRIES CORPORATION LTD. THE COMPAN Y HAS SET UP A HIGH-TECH GREEN HOUSE FLORICULTURE PROJECT, GROWING ROSE FLOWERS AT VILLAGE KUCHED IN JALALPORE BLOCK OF NAVSARI DISTRI CT IN GUJARAT. THE DIRECTORS' OF THE COMPANY ARE SHRI DIPAKBHAI DAYARA MBHAI PATEL WORKING AS MANAGING DIRECTOR AND ANOTHER DIRECTOR I S KUMAR DIPAKBHAI PATEL WORKING AS MARKETING DIRECTOR, BASI CALLY AGRICULTURISTS. THE COMPANY HAS ACQUIRED AGRICULTUR E LAND FROM THE AGRICULTURISTS ON LEASE FOR 25 YEARS FOR A LEASE RE NT OF 6 LACS P.A. FOR THE PURPOSE OF GREEN HOUSE FLORICULTURE VIDE LEASE AGREEMENT DATED 24/10/2002. THE COMPANY HAS DEVELOPED GREEN HOUSE F LORICULTURE PROJECT ON THAT LAND, GROWN ROSE PLANTS ON A BRIDGE OF PLASTIC TREY FILLED WITH MIXTURE OF SOIL, ERECTED ON M.S. STAND, 2-3 FEET ABOVE THE GROUND LEVEL. THE AGRICULTURAL LAND IS USED FOR SUP PORT THE BRIDGE OF PLASTIC TRAY ON M.S. STAND; NO ROOTS ARE ERECTED/PL ANTED ON SOIL. THE COMPANY HAS STARTED ITS COMMERCIAL PRODUCTION W.E.F . 01/10/2004. IN PROCESS OF THE ABOVE ACTIVITIES, THE COMPANY GROWS GOOD QUALITY OF ROSE FLOWERS AND EXPORTS THE SAME TO ABROAD. THE IN COME DERIVED FROM THE ABOVE ACTIVITIES DISCLOSED AS AGRICULTURAL INCOME AND CLAIMED EXEMPTION U/S.10(1) OF THE I.T. ACT. LD. A.O HAD ALSO GIVEN DETAIL FINDINGS ON PAGE NO.3 ON PROCESS OF GROWING ROSE FLOWERS, DEFINITION OF AGRICULTURE INCOME AND CONSIDERED VARIOUS CASE LAWS FROM PAGE NOS. 3 TO 13 AND HELD THAT THE OPERA TIONS CARRIED OUT TO GROW ROSE PLANT ON THE BRIDGE OF PLASTIC TRAY ERECTED ON MS STAND 2-3 FEET ABOVE THE EARTH LAND AND SALE OF ROSE FLOWER DO NOT FORM PART OF AGRICULTURAL ACTIVITIES AND ACCORDINGLY INCOME DERIVED THEREFROM ALSO DO NO T PARTAKE THE CHARACTER OF AGRICULTURAL INCOME. THEREFORE, THE ASSESSEES CLAIM U/S. 10(1) OF THE IT ITA NO. 3153/AHD/10 A.Y. 07-08 PAGE 3 ACT AS AGRICULTURAL INCOME IS DISALLOWED AND THE SA ME IS ASSESSED UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A ) WHO HAS ALLOWED THE APPEAL BY OBSERVING AS UNDER: 5.4 I HAVE CONSIDERED THE OBSERVATION OF THE AO MA DE IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAISED BY THE AR OF THE APPELLANT IN HIS WRITTEN SUBMISSION. THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF MY PREDECESSOR IN THE CASE OF TH E APPELLANT FOR THE A.Y. 2005-06 VIDE APPEAL NO.CIT(A)/VLS/389/07-08 DATED 31.01.2008. RESPECTFULLY FOLLOWING THE ORDER OF MY PREDECESSO R. THEREFORE THE AO IS DIRECTED TO GRANT EXEMPTION U/S .10(1) TO THE APPELLANT COMPANY. THE APPELLANTS GROUND NO.2 AND 3 ARE ALLOWED . 4. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. VEHE MENTLY RELIED UPON THE ORDER OF THE A.O., WHEREAS LD. COUNSEL FOR THE APPE LLANT FILED THE COPY OF ITAT, AHMADABAD, A BENCH DECISION IN ASSESSEES OWN CAS E FOR A.Y. 2005-06, THIS ISSUE HAS BEEN CONSIDERED BY THE CO-ORDINATE BENCH IN DETAIL AND DECIDED IN FAVOUR OF THE ASSESSEE. THEREFORE, HE REQUESTED TO UPHOLD THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE CO-ORDINATE A BENCH FOR A.Y. 2005-06 IN ITA NO. 1975/AHD/2008 HAD DECIDED THE APPEAL. THE OPERATIV E PORTION OF THE ORDER IS AS UNDER: 9.2 HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES , THE FIRST QUESTION RAISED BY US IS THAT IF THE ENTIRE INCOME IS AN EXEMPTED INCOME BEING FALLEN WITHIN THE CATEGORY OF AGRICULT URAL INCOME U/S.10(1) OF THE ACT THEN WHAT WILL BE THE TAX EFFE CT ON SUCH AN ITA NO. 3153/AHD/10 A.Y. 07-08 PAGE 4 ADDITION. BOTH THE SIDES HAVE ADMITTED THAT THIS GR OUND HAS CONSEQUENTIAL TAX EFFECT IF THE GRANT OF EXEMPTION FOR AGRICULTURAL INCOME IS REJECTED, OTHERWISE ACADEMIC IN NATURE. AS FAR AS LEGALITY OF THE ISSUE IS CONCERNED FOR NON-DEDUCTION OF TDS, WE ARE NOT WITH THE ARGUMENTS OF ASSESSEE, THEREFORE HEREBY AFFIRM THE FINDING OF LD. CIT(A). BUT LD. CIT(A) WAS IN RIGHT IN HOLDING THA T THE SAID DISALLOWANCE IS TO BE TREATED AS PART AND PARCEL OF AGRICULTURAL INCOME AND THEREFORE BENEFIT IS TO BE ALLOWED AS PR ESCRIBED U/S. 10(1) OF THE ACT. RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE A BENCH FOR A.Y. 05-06 IN ASSESSEES OWN CASE ON IDENTICAL ISSUE, WE ALSO CON FIRM THE ORDER OF THE CIT(A) IN THE YEAR UNDER CONSIDERATION. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . THIS ORDER PRONOUNCED IN OPEN COURT ON 25.10.2013 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;