THE INCOME TAX OFFICER WARD 1(1), RAIPUR (CG) V. SHRI VIMAL CHAWDA, RAIPUR (CG)

ITA 32/BIL/2016

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9682 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 17-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R B DOSHI
• Keywords: Business income; Salary income; Earning of tax free income; Tax effect
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.32/RPR/2016 ASSESSMENT YEAR : 2011-12 ITO, WARD 1(1), RAIPUR (CG). VS. VIMAL CHAWDA, VILL.- GOMCHI, NEAR NANDANVAN, POST: TENDUA, RAIPUR (CG). PAN : ACAPC6319A (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI SANJAY KUMAR, DR ASSESSEE BY : SHRI R. B. DOSHI, CA DATE OF HEARING : 14-08-2018 DATE OF PRONOUNCEMENT : 25-09-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 30.11.2015 OF THE LD. CIT(A)-I, RAIPUR RELATING TO ASSESSMENT YEAR 2011-12. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE READS AS UNDER :- 1. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.74,90,610/- MA DE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF NET PROFIT PROPORTIONATELY RS.74,90 ,610/- TREATING AS BUSINESS INCOME WHEREAS THE ASSESSEE HAS CLAIMED IT AS EXEMPT U/S 2 (1A) OF THE INCOME-TAX ACT, 1961 AS AGRICULTURAL INCOME, PARTICULARLY, WHEN THE VEGE TABLES/PADDY SEEDS ARE PRODUCED BY PROCESSING PLANNED SCIENTIFIC & TECHNICAL METHOD S. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND DERIVES INCOME FROM SALARY, INTEREST AND AGRICULTUR AL INCOME. HE FILED HIS RETURN 2 ITA NO.32/RPR/2016 OF INCOME ON 30.09.2011 DECLARING TOTAL INCOME OF R S.1,58,010/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER OBSERVED THAT THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME OF RS.1,02,2 0,520/- WHICH IS ON ACCOUNT OF SALE OF VEGETABLE AND PADDY SEEDS OF RS.2,88,55, 088/- AND SALE OF GREEN VEGETABLES AND FRUITS OF RS.1,05,16,066/-. THE ASS ESSEE CLAIMED THAT HE IS ENGAGED IN AGRICULTURAL OPERATIONS, INCOME FROM WHI CH HAS BEEN CLAIMED EXEMPT U/S 10(1) OF THE I.T. ACT, 1961. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON BEING QUESTIONED BY THE ASSESSING O FFICER, IT WAS SUBMITTED THAT THE ASSESSEE IS WORLDWIDE LEADER IN AGRICULTUR AL PRODUCE AND IS A DIRECTOR OF VNR SEEDS PVT. LTD. THEY CARRY OUT RESEARCH FOR CR EATING A LARGE VARIETY OF AGRICULTURAL PRODUCTS THAT ARE DISEASE RESISTANT AN D GIVE SUPERLATIVE PERFORMANCE. IT WAS SUBMITTED THAT THE COMPARATIVE TRIALS ARE CO NDUCTED EVERY YEAR FOR NEWLY DEVELOPED HYBRIDS. SEEDS WITH OTHER COMMERCIAL HYB RID SEEDS TO FIND OUT THE BEST SUITABLE VARIETIES FOR CHATTISGARH. FURTHER, HE DEVELOPED F1 HYBRID RICE TO SUIT LOCAL CLIMATE. THE ASSESSEE EXPLAINED THAT TH E COMPANY NAMELY VNR SEEDS PVT. LTD. PROCESSED AND PACKAGED THE SEEDS FOR ONWA RD TRANSMISSION TO THE FARMERS. IT WAS SUBMITTED THAT VNR SEEDS PVT. LTD. IS A RESEARCH AND PRODUCTION UNIT. ITS RESEARCHES ARE CARRIED OUT IN VARIOUS FIELDS OWNED BY ITS OWN DIRECTORS WHO THEN SELL THE SEEDS ONLY TO THEIR JOINT VENTURE COMPANY. IN THE PROCESS, ALL THESE DIRECTORS ARE CLAIMING EXEMP TION OF THE SALE PROCEEDS I.E. RESULT OF THE RESEARCH THAT IS HYBRID SEEDS BY TREA TING THE SAME AS AGRICULTURAL 3 ITA NO.32/RPR/2016 INCOME. THE SOURCE OF SEEDS USED FOR GROWING SEEDS IS KNOWN AS THE PARENT SEEDS AND WHENEVER PARENT SEEDS OF MORE THAN ONE AR E USED THE RESULTANT SEEDS ARE KNOWN AS HYBRID SEEDS. TYPE OF PARENT SEEDS ME ANS VARIETY INCLUDING THE NATURE OF SEEDS AS TO WHETHER THE RESULTANT CROP WI LL BE TALL, SHORT, DISEASE RESISTANT ETC. 4. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT TH E EXPLANATION GIVEN BY THE ASSESSEE. HE CONDUCTED FIELD ENQUIRY AND FOUND THAT VARIOUS NOTINGS ARE MADE IN THE STANDING CROPS AND THE ENTIRE FARM APPE ARED TO BE A RESEARCH LABORATORY. SORTING ROOMS FOR SEEDS WERE ALSO SEEN IN THE FARM. SEVERAL BRINJAL STALKS HAD BEEN BAGGED TO PREVENT POLLINATION BY WI ND. THE CROPS WERE COVERED WITH NET TO PREVENT NATURAL POLLINATION. STATISTIC S ABOUT MALE AND FEMALE PLANTS WERE WRITTEN IN METALLIC BOARDS. THE FIELDS NOWHER E APPEARED TO BE A NORMAL AGRICULTURAL FARM. ACCORDING TO THE ASSESSING OFFI CER, THE TERM AGRICULTURE HAS NOWHERE BEEN DEFINED IN THE INCOME TAX ACT AND, THEREFORE, IT HAS TO BE UNDERSTOOD FROM ITS USAGE. RELYING ON FOLLOWING DE CISIONS, THE ASSESSING OFFICER ADDED AN AMOUNT OF RS.74,90,610/- BEING NET PROFIT FROM SALE OF VEGETABLES AND PADDY SEEDS :- (I) CIT VS. RAJA BENOY KUMAR SAHAS ROY, 32 ITR 466. (II) BOGGAVARAPU PEDA AMMAIAH VS. CIT, 54 ITR 578. (III) MAHARAJA VIBHUTI NARAYAN SINGH VS. STATE OF U TTAR PRADESH, 65 ITR. (IV) K. LAKSHMANAN AND CO. VS. CIT, 239 ITR 597. (V) CIT VS. STANES AMALGAMATED ESTATES LTD., 232 I TR 443. 4 ITA NO.32/RPR/2016 5. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH AT HE IS CARRYING ON AGRICULTURAL ACTIVITIES AND DURING THE YEAR UNDER C ONSIDERATION, THERE WAS SALE OF RS.1,05,16,066/- ON ACCOUNT OF GREEN VEGETABLES AND FRUITS AND RS.2,88,55,088/- ON ACCOUNT OF VEGETABLES AND PADDY SEEDS AGGREGATIN G TO RS.3,93,71,154/-. THE ASSESSING OFFICER CONCLUDED THAT ACTIVITY OF SALE O F VEGETABLES AND PADDY SEEDS DOES NOT AMOUNT TO AGRICULTURAL AND, THEREFORE, SHE BROUGHT THE PROFIT TO TAX AS INCOME. APPLYING THE NET PROFIT RATE OF 25.959%, T HE ASSESSING OFFICER MADE ADDITION OF RS.74,90,610/- TO THE TOTAL INCOME OF T HE ASSESSEE AS BUSINESS INCOME. 6. TO EXPLAIN THE NATURE OF ACTIVITIES CARRIED OUT BY HIM, THE ASSESSEE SUMMARIZED ITS ACTIVITIES WHICH ARE AS UNDER :- FOR CULTIVATION, FIRST STEP UNDERTAKEN IS LAND PREP ARATION, WHICH INCLUDES JUTAI, BASIC FERTILIZER APPLICATION, PREPARING RAISED BED IN THE FIELD BY MEANS OF TRACTOR ETC. SOWING OF SEEDS BY MEANS OF MANUAL LABOUR, AFTER LA ND PREPARATION. AFTER GERMINATION OF SEEDS, FURTHER STEPS ARE UNDER TAKEN WHICH INCLUDES SPRAYING OF FERTILIZER, PESTICIDE, WEEDING, DIGGING OF SOIL AROUND THE GROWTH, REMOVAL OF UNDESIRABLE UNDERGROWTHS, TENDING, PRUNI NG, CUTTING, BAMBOO STACKING FOR WEEK STEM ETC. AFTER THE ABOVE BASIC AND SUBSEQUENT STEPS, THE CRO P IS GROWN. THE CROPS GROWN ARE NECESSARILY VEGETABLES AND FRUITS. OTHER THAN THESE, NOTHING IS GROWN. IT IS WRONG TO SAY THAT EITHER HYBRID OR PARENT SEEDS ARE GROWN. SEEDS OF DIFFERENT CROPS ARE PART OF THE VEGETABLE/FRUITS GROWN. SEED S AS SUCH CAN NEVER BE GROWN. SOME PART OF THE CROPS SO OBTAINED IS SOLD AS VEGET ABLES/FRUITS WHILE FROM SOME OF THE CROPS, BY MEANS OF THRASHING, SEEDS ARE SEPA RATED FROM THE CROPS AND THE RESIDUE GOES WASTE. PLAK WHETHER SALE OF FRUITS AND SEEDS ARE SHOWN S EPARATELY. THE VEGETABLES/FRUITS ARE SOLD IN THE MARKET WHILE SEED S OBTAINED FROM THE GROWN CROPS ARE SOLD MAINLY TO VNR SEEDS PVT. LTD. 5 ITA NO.32/RPR/2016 7. REFERRING TO THE ABOVE, IT WAS SUBMITTED THAT TH E ABOVE ACTIVITIES CLEARLY DEMONSTRATE THAT WHAT IS BEING CARRIED OUT BY THE A SSESSEE IS NECESSARILY FOR AGRICULTURAL ACTIVITY, WHICH ARE UNDERTAKEN BY ALL THE FARMERS AND THESE ACTIVITIES ARE ESSENTIAL FOR GROWING ANY CROP. RELYING ON VAR IOUS DECISIONS, IT WAS ARGUED THAT INCOME SHOULD BE TREATED AS AGRICULTURAL INCOM E AND NOT AS BUSINESS INCOME ALREADY TREATED BY THE ASSESSING OFFICER. 8. BASED ON THE ARGUMENT ADVANCED BY THE ASSESSEE, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO TREAT THE INCOME AS AGRICU LTURAL INCOME AND ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER :- 2.3 FACTS BEING AS ABOVE, AS HAS ABOVE REPRODUCED IN PARA 2.1 THE AO HAS MADE CONCLUSION THAT THE ASSESSEE'S INCOME IS NOT AGRICU LTURAL INCOME BECAUSE OF SEVERAL OBSERVATIONS MADE BY HER. SHE FOUND THAT NOTINGS WE RE MADE ON STANDING CROPS, ENTIRE FARM APPEARED A LABORATORY, SORTING ROOMS WE RE SEEN ON THE FARM, BRINJAL STALKS HAVE BEEN BAGGED TO PREVENT POLLINATION BY W IND, CROPS WERE COVERED WITH NETS TO PROVIDE NATURAL POLLINATION, STATISTICS WERE WRI TTEN IN METALLIC BOARD ETC. SHE NOTED THAT THE PROCESS OF DEVELOPMENT OF PLANT SEED FOR H YBRIDIZATION IS A FAR CRY FROM THE ORDINARY PROCESS USED BY CULTIVATORS. WE NEED TO EX AMINE WHETHER THESE ACTIVITIES UNDERTAKEN BY THE APPELLANT ARE IN ANY WAY DIFFEREN T FROM THE NORMAL AGRICULTURAL OPERATION CARRIED OUT BY THE CULTIVATORS. IN THE CA SE OF RAJA BENOY KUMAR SAHAS ROY 32 ITR 466 (SC) 1957 HON'BLE SUPREME COURT HELD THA T AGRICULTURAL OPERATION INCLUDES BASIC OPERATIONS OF TILLING OF LAND, SOWIN G, WEEDING, WATERING, REMOVAL OF UNDESIRABLE GROWTH, PREVENTION OF CROPS FROM INSECT S AND PESTS AND FROM DEPREDATION BY CATTLE, TENDING, PRUNING, CUTTING ETC. IT IS NOT THAT THE ASSESSEE IN THE PRESENT CASE DID NOT APPLY ALMOST ALL THESE OPERATIONS, DEPENDIN G ON THE NEED OF PRODUCES FRUITS AND VEGETABLES. PART OF FRUITS AND VEGETABLES ARE S OLD AS SUCH AND PART ARE USED TO EXTRACT SEEDS. AO HAS CONSIDERED INCOME FROM FRUITS AND VEGETABLES AS AGRICULTURAL INCOME. WHETHER IT IS FRUIT AND VEGETABLES OR THE S EEDS, ALL THE OPERATIONS UNDER TAKEN BY THE APPELLANT ARE SAME TILL THE GROWING OF FRUIT S AND VEGETABLES. IF THE AGRICULTURIST MAKING NOTINGS IN THE CROP FOR HIS REFERENCE, PLACE S METALLIC BOARDS WITH STATISTICS AND MAKING PHYSICAL SEPARATION BETWEEN CROPS TO PREVENT CROSS POLLINATION AND AS REQUIRED IN OTHER CASES THESE SEPARATIONS ARE NOT M ADE TO ALLOW CROSS POLLINATION THESE ARE TO ACHIEVE THE PRODUCT OF DESIRED QUALITY . THESE PROCESSES DO NOT MAKE THE CROP AS NON- AGRICULTURAL PRODUCT. WHEN THE AO TREA TED FRUITS AND VEGETABLES AS AGRICULTURAL CORPS WHICH HAVE BEEN PRODUCED BY ADOP TING EXACTLY SAME PROCEDURES AND EMPLOYING SAME OPERATIONS, SEPARATE TREATMENT C ANNOT BE GIVEN TO SEEDS. BECAUSE SAME FRUITS AND VEGETABLES HAVE BEEN USED T O OBTAIN SEEDS. NO FURTHER 6 ITA NO.32/RPR/2016 OPERATION HAS BEEN PERFORMED ACCEPT PEELING THE FRU ITS AND VEGETABLES TO OBTAIN SEEDS, THEREFORE, THE INCOME OF THE ASSESSEE HAS TO BE TREATED AS AGRICULTURAL INCOME AND ACCORDINGLY THE ADDITION MADE BY THE AO IS DELE TED. 9. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 10. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. REFERRING TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE K . LAKSHMANAN AND CO. VS. CIT REPORTED IN 239 ITR 597, HE SUBMITTED THAT THE HON'BLE SUPREME COURT IN THE SAID DECISION HAS HELD AS UNDER :- AGRICULTURAL INCOME WOULD INCLUDE AN INCOME DERIVE D FROM SUCH LAND BY PERFORMANCE BY A CULTIVATOR OF ANY PROCESS ORDINARI LY EMPLOYED BY HIM TO RENDER THE PRODUCE RAISED BY HIM FIT TO BE TAKEN TO MARKET. IT IS CLEAR FROM THE READING OF THE AFORESAID STATUTORY PROVISION THAT WHAT IS TAKEN TO THE MARKET AND SOLD MUST BE THE PRODUCE WHICH IS RAISED BY THE CULTIVATOR. THE A GRICULTURAL PRODUCE OF THE CULTIVATOR WOULD BE MULBERRY LEAVES AND BY NO STRET CH OF IMAGINATION COULD THE SILK WORMS AND CERTAINLY NOT THE SILK COCOONS BE REGARDE D AS THE AGRICULTURAL PRODUCE OF THE CULTIVATOR. THE INCOME DERIVED BY THE ASSESSEE FROM THE SALE OF COCOONS COULD NOT IN LAW BE REGARDED AS AGRICULTURAL INCOME HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE LD. CIT(A) BE RESTORED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 11. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER H AND STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT THE ASS ESSING OFFICER IS ACCEPTING THE SALE OF FRUITS AND VEGETABLES AS AGRICULTURAL I NCOME BUT TREATED THE SALE OF SEEDS AS NON-AGRICULTURAL INCOME. HE SUBMITTED THA T SEEDS CANNOT BE OBTAINED WITHOUT FRUITS AND VEGETABLES. NO PART OF ACTIVITY OF THE ASSESSEE IS AN EXTRA ORDINARY ACTIVITY DESERVING TO BE TREATED AS NON-AG RICULTURAL ACTIVITY. HE 7 ITA NO.32/RPR/2016 SUBMITTED THAT THE ASSESSING OFFICER HAS VISITED FA RMS OF THE ASSESSEE AS WELL AS VNR SEEDS PVT. LTD.. HER CONCLUSIONS ARE BASED ON HER PHYSICAL INSPECTION/VISIT OF THE FARMS OF VNR SEEDS PVT. LTD .. THE ASSESSING OFFICER CONFUSED BETWEEN THE FARMS OF THE ASSESSEE AND RESE ARCH ACTIVITIES OF VNR SEEDS PVT. LTD.. THE LD. COUNSEL FOR THE ASSESSEE FILED A CHART SHOWING THE VIEW GIVEN BY THE ASSESSING OFFICER FROM ASSESSMENT YEAR 2006-07 ONWARDS. HE SUBMITTED THAT IN ASSESSMENT YEAR 2006-07 TO 2009-1 0 AND 2014-15, THE ASSESSMENTS WERE COMPLETED U/S 143(3) WHEREIN THE A SSESSING OFFICER HIMSELF HAS ACCEPTED THE SALE OF VEGETABLES/FRUITS AND SEED S USING THE SAME TECHNIQUE AS AGRICULTURAL INCOME. SIMILARLY FOR ASSESSMENT YEAR 2012-13 AND 2013-14 ALTHOUGH THE ASSESSING OFFICER HAS MADE ADDITION U/ S 143(3) BY TREATING THE INCOME FROM SALE OF SEEDS AS BUSINESS INCOME, HOWEV ER, THE LD. CIT(A) HAD GRANTED RELIEF AND THE REVENUES APPEALS WERE DISMI SSED ON ACCOUNT OF LOW TAX EFFECT. SIMILARLY, IN ASSESSMENT YEAR 2014-15 AND 2015-16 THE ASSESSING OFFICER HIMSELF ACCEPTED THE SAME IN SCRUTINY ASSES SMENT AS AGRICULTURAL INCOME. 12. REFERRING TO THE FOLLOWING DECISIONS, HE SUBMIT TED THAT IN ALL THESE CASES THE SALE OF SEEDS HAS BEEN TREATED AS AGRICULTURAL INCOME :- (I) ADVANTA INDIA LTD. VS. ACIT, 143 ITD 387. (II) VIBHA AGROTECH LTD. VS. ITO, 120 ITD 182. (III) ADVANTA INDIA LTD. VS. DCIT, 29 CCH 540. (IV) CIT VS. PRABHAT AGRI BIOTECH LTD. ITA NO.1616 /HYD/2014 DT.03.07.2015. 8 ITA NO.32/RPR/2016 13. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE LD. CIT(A) BE UPHELD AND THE GROUND RAISED BY THE REVENUE SHOULD BE DISMISSE D. 14. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE LD. CIT(A). WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE IN THE INSTANT CASE HAS FILED HIS RETURN OF INCOME DECLARI NG AGRICULTURAL INCOME OF RS.1,02,20,520/-. THE INCOME WAS DECLARED ON ACCOU NT OF SALE OF VEGETABLES AND PADDY SEEDS AT RS.2,88,55,088/- AND SALE OF GRE EN VEGETABLES AND FRUITS AT RS.1,05,16,066/-. THE ASSESSEE CLAIMED THE AGRICUL TURAL INCOME AS EXEMPT INCOME U/S 10(1) OF THE I.T. ACT. WE FIND THE ASSE SSING OFFICER APPLYING THE NET PROFIT RATE OF 25.959 ON SALE OF VEGETABLES AND PADDY SEEDS MADE ADDITION OF RS.74,90,610/- TO THE TOTAL INCOME OF THE ASSESSEE TREATING THE SAME AS NON- AGRICULTURAL INCOME. WE FIND THE LD. CIT(A) TREATE D SUCH INCOME AS AGRICULTURAL INCOME AND THEREBY ALLOWED THE CLAIM OF THE ASSESSE E, THE REASONS FOR WHICH HAS ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPH. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS IS SUE. WE FIND THE ASSESSING OFFICER IN THE INSTANT CASE HAS ACCEPTED THE INCOME ON SALE OF VEGETABLES AND FRUITS AS AGRICULTURAL INCOME. HOWEVER, HE HAS TRE ATED THE INCOME FROM SALE OF VEGETABLE AND PADDY SEEDS AS NON-AGRICULTURAL INCOM E. WE FIND MERIT IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT W ITHOUT PRODUCING THE FRUITS/VEGETABLES THE ASSESSEE CANNOT PRODUCE THE S EEDS AND SAME ACTIVITIES ARE 9 ITA NO.32/RPR/2016 REQUIRED FOR PRODUCING THE SEEDS WHICH ARE REQUIRED FOR PRODUCING THE FRUITS/VEGETABLES. WE FIND THE ASSESSING OFFICER I N THE ORDER PASSED U/S 143(3) FOR ASSESSMENT YEAR 2006-07 TO 2009-10 AND FOR ASSE SSMENT YEAR 2014-15 AND 2015-16 HAS ACCEPTED THE SALE OF VEGETABLES/FRUITS AND SEEDS AS AGRICULTURAL INCOME. ALTHOUGH IN THE ORDER FOR ASSESSMENT YEAR 2012-13 AND 2013-14, THE ASSESSING OFFICER HAD TREATED THE PROFIT FROM SALE OF SEEDS AS NON-AGRICULTURAL INCOME, HOWEVER, IN APPEAL, THE LD. CIT(A) HAS GRAN TED THE RELIEF AND THE APPEAL FILED BY THE REVENUE HAS BEEN DISMISSED ON ACCOUNT OF LOW TAX EFFECT. 15. WE FIND THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S PRABHAT AGRI BIOTECH LTD. VIDE ITA NO.1616/HYD/ 2014 ORDER DATED 03.07.2015 HAS HELD THE INCOME GENERATED FROM SALE OF BASIC/FOUNDATION SEEDS AS EXEMPT U/S 10(1) OF THE I.T. ACT. THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF ADVANTA INDIA LTD. VS. DCIT REPORTED IN 143 ITD 387 HAS HELD THAT INCOME DERIVED BY THE ASSESSEE FROM THE ACTIVITY OF PRODUCTION OF HYBRID SEEDS FROM BASIC SEEDS IS AN AGRICULTURAL INCOME AND ACCO RDINGLY EXEMPTED U/S 10(1) OF THE I.T. ACT. THE HYDERABAD BENCH OF THE TRIBUN AL IN THE CASE OF VIBHA AGROTECH LTD. VS. ITO REPORTED IN 120 ITD 182 HAS H ELD THAT WHERE THE ASSESSEE IS ENGAGED IN RESEARCH, PRODUCTION AND MARKETING OF HYBRID SEEDS BY CARRYING OUT BASIC AGRICULTURAL OPERATIONS ON THE LAND, EXPE NDITURE, HUMAN SKILL AND LABOUR, THE INCOME FROM SALE OF BASIC SEEDS IS AGRI CULTURAL INCOME WITHIN THE MEANING OF SECTION 2(1A) AND ELIGIBLE FOR EXEMPTION U/S 10(1) OF THE I.T. ACT. 10 ITA NO.32/RPR/2016 IN VIEW OF THE DECISIONS CITED (SUPRA) AND CONSIDER ING THE FACT THAT THE ASSESSING OFFICER IN ASSESSMENT YEAR 2014-15 AND 2015-16 HAS ACCEPTED THE PROFIT FROM SALE OF VEGETABLES/FRUITS AND SEEDS AS AGRICULTURAL INCOME, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) TREATING T HE PROFIT FROM SALE OF SEEDS AS AGRICULTURAL INCOME. THE ORDER OF THE LD. CIT(A) I S ACCORDINGLY UPHELD AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 16. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH SEPTEMBER, 2018. SD/- SD/- (SUCHITRA KAMBLE) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25-09-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., RAIPUR. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY ITAT, RAIPUR