Chander Mohan, Yamunanagar V. ITO, Yamunanagar

ITA 389/CHANDI/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80980 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-10-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 03-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S NAG
• Assessee Lawyers: CHANDER MOHAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 389, 377/CHD/2012 ASSESSMENT YEARS : 2003-04 & 2004-05 CHANDER MOHAN V I.T.O. WARD 4 M/S CLASSIC MASHROOM YAMUNANAGAR CHITTA MANDIR ROAD YAMUNANAGAR ABCPL 0454E (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI CHANDER MOHAN RESPONDENT BY: SHRI J.S. NAG AR DATE OF HEARING 16.10 .2014 DATE OF PRONOUNCEMENT 28.10.201 4 O R D E R PER T.R. SOOD, A.M THESE APPEALS ARE DIRECTED AGAINST THE ORDER OF THE LD CIT(A), KARNAL DATED 2.2.2012. 2. IN ITA NO. 389/CHD/2012, ASSESSMENT YEAR 2003-0 4 THE ASSESSEE HAS RAISED THE FOLLOWING GROUND: WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ADDITIO N MADE BY THE ASSESSING OFFICER AT RS. 205,120/- TREATING THIS INCOME FROM GROWING OF SALE OF MUSHROOM AND NOT INC OME FROM AGRICULTURE AND TREATED THE AGRICULTURAL INCOM E TO BE INCOME FROM OTHER SOURCES. 3 IN ITA NO. 377/CHD/2012, ASSESSMENT YEAR 2004-05 THE ASSESSEE HAS RAISED THE FOLLOWING GROUND: WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ADDITIO N MADE BY THE ASSESSING OFFICER AT RS. 295,440/- TREATING THIS INCOME FROM GROWING OF SALE OF MUSHROOM AND NOT INC OME FROM AGRICULTURE AND TREATED THE AGRICULTURAL INCOM E TO BE INCOME FROM OTHER SOURCES. 4 AFTER HEARING BOTH THE PARTIES WE FIND THAT THE ASSESSEE HAD FILED RETURN DECLARING NET TAXABLE INC OME AT NIL. IN ASSESSMENT YEAR 2003-04 IN THE COMPUTATIO N OF INCOME THE ASSESSEE HAD SHOWN INCOME OF RS. 205, 12 0/- 2 FROM GROWING OF MASHROOM WHICH WAS CLAIMED AS AGRICULTURAL INCOME AND WAS THEREFORE EXEMPT FROM T AX. 5 IT SEEMS THE APPEAL OF THE ASSESSEE WAS DISMISSE D BY THE LD. CIT(A), PANCHKULA AND THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL REMAND ED THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER IN ITA NO. 310/CHD/2008 AND RELEVANT PARA OF THE ORDER HAS BEE N EXTRACTED BY THE ASSESSING OFFICER IN ASSESSMENT YE AR 2004-05 WHICH IS AS UNDER: I HAVE FOUND FORCE IN THIS ARGUMENT OF EH ASSESSEE BUT STILL TO BE FAIR TO BOTH THE SIDES, SPECIALLY WHEN ALL TH E DETAILS WERE NOT FURNISHED DURING ASSESSMENT PROCEEDINGS, IT WILL BE FAIR IF THE ASSESSING OFFICER IS DIRECTED TO EXA MINE THE DETAILS OF ANY FURNISHED BY THE ASSESSEE AND HEN TO TAKE DECISION IN ACCORDANCE WITH LAW. NEEDLESS TO MENTI ON HERE THAT DUE OPPORTUNITY BE PROVIDED TO THE ASSESSEE. CONSEQUENTLY ALL THESE GROUNDS OF THE ASSESSEE ARE SENT TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATIO N, THEREFORE THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSES ONLY. IN VIEW OF ABOVE FRESH NOTICE U/S 143(2) WAS ISSUED . IN RESPONSE THE ASSESSEE APPEARED ALONG WITH CHARTERED ACCOUNTANT AND FILED FOLLOWING REPLY: THE BASIC MATERIAL FOR GROWING THE MUSHROOM INCLUD ES SOIL (MITTI), WHEAT STRAW, HUSK, ZIPSUM, UREA, SUPER POT ASH AND CAN (KISSAN KHAD) AND MOLASSES, RICE HUSK, SAND, GO BAR, SEE (WHEAT) AND MANUAL LABOUR. WE SOW SEED IN THE MIXE D MATERIAL AND THAT IS KEPT IN POLYTHENE BAGS IN THE SHAPE OF BED ALSO. THEN WE SPRAY WATER ON ALL THE POLYTHENE BAGS IN THE SHAPE OF BED ALSO. THEN WE SPRAY WATER ON ALL THE POLYTHENE BAGS.ON THOSE BAGS, WE PUT RAAKH, MITTI A ND DESI KHADD (MADE FROM GOBAR) WHICH WE PREPARE OUTSELVES. AFTER ABOUT 15 DAYS MUSHROOM COMES OUT AND AFTER CUTTING AND WASHING, WE SELL IT FRESH IN THE MARKET. FOR GROWING THE MUSHROOMS, HE HAS TO LOOK AFTER WEE DING, REMOVING PESTS, INSECTS ETC. TENDING, PRUNING HARVE STING AND RENDERING THE PRODUCE TO MAKE IT MARKETABLE. WE GR OW MUSHROOMS FROM NOVEMBER TO FEBRUARY ONLY IN NATURAL CLIMATIC CONDITIONS AND NO ELECTRICAL APPLIANCES US ED. THE MUSHROOM IS AN AGRICULTURAL INCOME AND FOR THAT YOU R KIND ATTENTION IS DRAWN TOWARDS EARLIER RESULTS ACCEPTED BY THE PREDECESSOR OFFICERS AVAILABLE AT PAGE 8 TO 18 OF T HE PAPER BOOK. THE PARTICULAR OF DECLARED AND ACCEPTED AGRI CULTURAL INCOME ARE AS UNDER: ASSESSMENT YEAR INCOME (RS) 2001-02 93.230 2002-03 94.450 2003-04 205,120 2004-05 253,030 CERTIFICATE OF ADDITIONAL SECRETARY TO GOVERNMENT O F INDIA AVAILABLE AT PAGE 6 AND THAT OF DIRECTOR OF DIRECTO R OF 3 HORTICULTURE, HARYANA AVAILABLE AT PAGE 7, FURTHER SUBSTANTIATE THE ABOVE FACTS., IN THESE FACTS, TH ERE OUGHT NOT BE DOUBT TO TREAT THE INCOME FROM GROWING AND S ALE FROM MUSHROOMS AS AGRICULTURE. YOUR KIND ATTENTION IS INVITED TO THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT REPORTED IN 32 ITR 466 AND HO N'BLE ANDHRA PRADESH HIGH COURT REPORTED IN 42 ITR 83 AND TO THE JUDGMENT OF HON'BLE MADRAS HIGH COURT REPORTED IN 2 4 ITR 531. THE HON'BLE MADRAS HIGH COURT HAVE HELD AS UN DER: ALL THE PRODUCTS OF THE LAND WHICH HAVE SOME UTILIT Y EITHER FOR SOME CONSUMPTION OR FOR TRADE OR COMMERCE IF TH EY ARE BASED ON LAND, WOULD BE AGRICULTURAL PRODUCTS. IF THE PLANT SOLD IN POTS WERE THE RESULT OF BASIC OPERATIONS ON THE LAND EXPENDING HUMAN SKILL AND LABOUR THEREON AND IF AFT ER PERFORMANCE OF THE BASIC OPERATIONS ON LAND THE RES ULTANT PRODUCT GROWN OR SUCH PART THEREOF WAS SUITABLE FOR BEING NURTURED IN A POT WITH WASTER OR BY PLACING THEM IN THE GREEN HOUSE OR IN SHADE OR AFTER PERFORMING SEVERAL OPERA TIONS SUCH AS WEEDING, WATERING, MANURING ETC. AND ARE MA DE READY FOR SALE, ALL THESE OPERATIONS ARE AGRICULTUR AL OPERATION AND THE PLANTS ARE PRODUCT OF AGRICULTURE . THE ASSESSEE WAS CARRYING ON BUSINESS OF A NURSERY AND VARIOUS TYPES OF FRUIT PLANTS, FLOWER PLANTS, VEGET ABLE PLANTS AND SEEDLINGS ON SCIENTIFIC BASIS, GROW PLANTS ON P REPARED BEDS AND AFTER SEVERAL OPERATIONS CARRIED OUT ON TH E LAND VIZ. CUTTING, GOOTYING AND INARCHING THEY WERE TRAN SPLANTED IN SUITABLE CONTAINER INCLUDING POTS AND KEPT IN TH E GREEN HOUSE IN SHADE AND THEN SOLD. THE ASSESSEE CLAIMED THAT THE INCOME DERIVED FROM THE SALE OF PLANTS IN POTS. FURTHER RELIANCE WAS PLACED ON CERTAIN JUDGMENTS. T HE ASSESSING OFFICER OBSERVED THAT THE CASES RELIED ON BY THE ASSESSEE ARE ON DIFFERENT FACTS. HE OBSERVED THAT F OR GROWING OF MUSHROOMS, WOODEN CASING FILLED WITH COM POST IS STACKED IN THE ROOMS UNDER CONTROLLED TEMPERATUR E. THE ACTIVITY PERFORMED BY THE ASSESSEE IS NO WAY IN THE NATURE OF CULTIVATION AND HENCE NOT COVERED WITHIN THE DEF INITION OF AGRICULTURE. 6 THE ASSESSING OFFICER ALSO REFERRED TO CIRCULAR NO. 258 DATED 14.6.1979 ISSUED BY CBDT IN WHICH INCOME FROM MASHROOMS GROWING WAS DIRECTED NOT TO BE TREATED AS AGRICULTURAL INCOME. RELEVANT PARAGRAPH HAS BEEN EXTRACTED BY THE ASSESSING OFFICER IN HIS ASSESSMEN T ORDER AND READS AS UNDER: U/S 10(1) OF IT ACT AGRICULTURAL INCOME IS EXEMPT FROM INCOME TAX ACT. FOR THIS PURPOSE, AGRICULTURAL INC OME INCLUDES ANY INCOME FROM DERIVED FROM LAND SITUATED IN INDIA AND USED FOR AGRICULTURAL PURPOSES. MUSHROOMS ARE GENERALLY GROWN IN A CLOSED CHAMBER AND NOT NECESSA RILY IN 4 AN OPEN FIELD. IS RAW MATERIAL IS A COMPOSITE MADE OF WHEAT STRAW, POULTRY MANURE CALCIUM CARBONATE, GYPSUM AND OTHER FERTILIZERS. DIFFERENT LAYERS OF ARTIFICIAL SOIL A RE PREPARED IN WOODEN TRAYS AND TEMPERATURE IS CONTROLLED TO A SPE CIFIED DEGREE BY CLOSING THE INLETS AND OUTLETS OF AIR TO PROVIDE THE NECESSARY HUMIDITY FOR CULTIVATION OF MUSHROOMS. T HIS PROCESS IS KNOWN AS MUSHROOM GROWING UNDER CONTROLL ED CONDITIONS CANNOT BE REGARDED AS AGRICULTURAL INCOM E AND IS, THEREFORE CHARGEABLE TO INCOME TAX. THE ASSESSING OFFICER ALSO OBSERVED THAT CIRCULAR W AS ISSUED WHILE DEALING WITH THE SCOPE OF SEC 80- JJA OF IT ACT WHICH HAS ALREADY BEEN OMITTED BUT THROWS LIGHT WITH REGARD TO DEFINITION OF AGRICULTURAL INCOME. IN TH IS BACKGROUND THE ASSESSING OFFICER HELD THAT THE INCO ME FROM GROWING OF MUSHROOMS WAS NOT AGRICULTURAL INCOME A ND WAS HELD TO BE TAXABLE INCOME. 7 THE LD. CIT(A) AFTER ELABORATE DISCUSSION OBSER VED THAT THE ASSESSEE HAD ADMITTEDLY GROWN MUSHROOMS IN RESIDENTIAL AREA WITHIN THE MC LIMITS. THEREFORE T HE INCOME CANNOT BE HELD TO BE AGRICULTURAL INCOME IN VIEW OF THE PROVISIONS OF SECTION 2(1A) OF IT ACT, 1961. THE LD. CIT(A) ALSO REFERRED TO THE DECISION OF HON'BLE SUP REME COURT IN CASE OF CIT V. RAJA BENOY KUMAR SAHAS R OY, 32 ITR 466 AND HELD THAT THE INCOME FROM MUSHROOMS WAS NOT AGRICULTURAL INCOME. 8 BEFORE US THE ASSESSEE APPEARED IN PERSON AND SUBMITTED THAT GOVT OF HIMACHAL PRADESH HAS ISSUED A NOTIFICATION THROUGH WHICH A CULTIVATION OF MUSHROO MS WAS DECLARED TO BE AGRICULTURE ACTIVITY. THEREFORE IN VIEW OF THIS THE INCOME OF ASSESSEE SHOULD BE TREATED AS AGRICULTURAL INCOME. HE FURTHER SUBMITTED THAT HE H AS SOUGHT INFORMATION FROM GOVERNMENT OF INDIA, MINIST RY OF FINANCE, CBDT ABOUT CLARIFICATION OF LEVY OF INCOME TAX ON SEASONAL MUSHROOM FARMS BUT NO INFORMATION HAS BEEN 5 PROVIDED STATING THAT SUCH INFORMATION IS NOT AVAIL ABLE AND THEREFORE CASE SHOULD BE KEPT PENDING. 9 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE STRONGLY SUPPORTED THE ORDER OF ASSESSING OFFICER A ND THE LD. CIT(A). 10 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. AS FAR AS INFORMATION FROM THE MINISTRY OF FINANCE, CBDT IS CONCERNED, RELEVANT LETTER READS AS UNDER: F. NO. 173/148/2014-ITA-I GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES (ITA-I DIVISION) NEW DELHI, THE OCT, 2014 TO SHRI CHANDER MOHAN LUTHRA CLASSIC MUSHROOM FARM NEAR CHITTA MANDIR YAMUNANAGAR HARYANA 135001 SUB: INFORMATION SOUGHT UNDER RIGHT TO INFORMATION ACT, 2005 SIR, I AM DIRECTED TO REFER TO YOUR RTI APPLICATION DA TED 5.8.2014 RECEIVED IN THIS OFFICE ON 16.9.2014 ON THE ABOVE M ENTIONED SUBJECT. 2 WITH RESPECT TO QUERY RAISED IN YOUR RTI APPLICAT ION, IT MAY BE NOTED THAT THE SAID INFORMATION IS NOT AVAILABLE IN THIS OFFICE. 3 IF YOU ARE NOT SATISFIED WITH THE REPLY, YOU MAY FILE AN APPEAL WITH THE FIRST APPELLATE AUTHORITY I.E. DEPUTY SECRETARY (ITA-I), CENTRAL BOARD OF DIRECT TAXES, DEPARTMENT OF REVENUE, N ORTH BLOCK, NEW DELHI 110011 W2ITHIN 30 DAYS OF RECEIPT OF THIS L ETTER. 4 HINDI VERSION TO FOLLOW. YOURS FAITHFULLY, SD/- (SHAILENDRA KUMAR) CPIO-DCIT-OSD (ITA-I) THE ABOVE REPLY FROM CBDT CLEARLY SHOWS THAT THEY H AVE NO INFORMATION WHICH MEANS THE GOVT HAS NOT ISSUED ANY CIRCULAR OR NOTIFICATION IN RESPECT OF INCOME FROM THE MUSHROOMS. MERELY BECAUSE THE GOVT HAS NO INFORMAT ION, 6 IS NOT A REASON FOR KEEPING A PARTICULAR CASE PENDI NG AND THEREFORE WE FIND NO FORCE IN THIS CONTENTION. 11 NOTIFICATION ISSUED BY THE GOVT OF HIMACHAL PRAD ESH READS AS UNDER: GOVERNMENT OF HIMACHAL PRADESH DEPARTMENT OF AGRICULTURE NO. AGR.B-F(10)4/2013 DATED: 8 TH NOV 2013 NOTIFICATION THE GOVERNOR OF HIMACHAL PRADESH IS PLEASED TO DECL ARE THE CULTI8 OF WHITE BUTTON MUSHROOM (DHINGRI) MILKY MUSHROOM, OYSTER MUSHROOM AND ANY OTHER EDIBLE MUSHROOM WHETHER CULT IVATED OR GROWING NATURALLY AS AN AGRICULTURAL ACTIVITY WITH IMMEDIATE EFFECT. BY ORDER ADDITIONAL CHIEF SECRETARY (AGRICULTURE) TO THE GOVERNMENT OF HIMACHA L PRADESH READING OF ABOVE NOTIFICATION CLEARLY SHOWS THAT SA ME PERTAINS TO BUTTER MUSHROOMS (DHINGRI), MILKY MUSHR OOM, OYSTER MUSHROOM AND ANY OTHER EDIBLE MUSHROOM. IN OUR OPINION, THESE ARE DIFFERENT PRODUCTS THAN FROM NOR MAL MUSHROOMS. IN ANY CASE GOVT OF HIMACHAL PRADESH HA S NO AUTHORITY TO ISSUE NOTIFICATION IN RESPECT OF CENTR AL LEGISLATION I.E. INCOME TAX WHICH IS A CENTRAL SUBJ ECT. CONSTITUTION OF INDIA HAS DIVIDED THE AREAS OF FUNC TIONING OF CENTRAL AND STATE GOVERNMENTS BY PUTTING VARIOUS SU BJECTS IN DIFFERENT LISTS. LIST ONE OF THE CONSTITUTION O F INDIA CONTAINS THE SUBJECT OF INCOME TAX AND THEREFORE SU BJECT OF INCOME TAX WOULD REMAIN IN EXCLUSIVE DOMAIN OF GOVERNMENT OF INDIA AND STATE GOVERNMENT CANNOT ENA CT ANY LAWS ON THIS SUBJECT AND THAT IS WHY WE HAVE ON LY ONE INCOME TAX ACT, 1961 WHICH IS APPLICABLE TO WHOLE O F INDIA. WE ARE NOT DEALING IN DETAIL WITH THESE ISSUES BECA USE THEY ARE NOT RELEVANT. GOVT OF HIMACHAL PRADESH MIGHT HA VE ISSUED A NOTIFICATION FOR THE SOME OTHER PURPOSES W HICH IS NOT RELEVANT FOR ISSUE BEFORE US. 7 12 AGRICULTURAL INCOME HAS BEEN DEFINED IN SEC 2(1A ) AND THAT SECTION READS AS UNDER: 2 [(1 A )] AGRICULTURAL INCOME' MEANS [( A ) ANY RENT OR REVENUE DERIVED FROM LAND WHICH IS SI TUATED IN INDIA AND IS USED FOR AGRICULTURAL PURPOSES;] ( B ) ANY INCOME DERIVED FROM SUCH LAND BY ( I ) AGRICULTURE; OR ( II ) THE PERFORMANCE BY A CULTIVATOR OR RECEIVER OF RE NT-IN-KIND OF ANY PROCESS ORDINARILY EMPLOYED BY A CULTIVATOR OR RECEIVER OF RENT-IN-KIND TO RENDER THE PRODUCE RAISED OR RECEIVED BY HIM FIT TO BE TAK EN TO MARKET; OR ( III ) THE SALE BY A CULTIVATOR OR RECEIVER OF RENT-IN-K IND OF THE PRODUCE RAISED OR RECEIVED BY HIM, IN RESPECT OF WHICH NO PROCESS HAS BEEN PERFORMED OTHE R THAN A PROCESS OF THE NATURE DESCRIBED IN PARAGRAPH ( II ) OF THIS SUB-CLAUSE ; ( C ) ANY INCOME DERIVED FROM ANY BUILDING OWNED AND OC CUPIED BY THE RECEIVER OF THE RENT OR REVENUE OF ANY SUCH LAND, OR OCCUPIED BY THE CULTIVATOR OR THE RECEIVER OF RENT-IN-KIND, OF ANY LAND WITH RESPECT TO WHICH, OR THE PRODUCE OF WHICH, ANY PROC ESS MENTIONED IN PARAGRAPHS ( II ) AND ( III ) OF SUB- CLAUSE ( B ) IS CARRIED ON : [ PROVIDED THAT ( I ) THE BUILDING IS ON OR IN THE IMMEDIATE VICINITY O F THE LAND, AND IS A BUILDING WHICH THE RECEIVER OF THE RENT OR REVENUE OR THE CULTIVATOR, OR THE RECEI VER OF RENT-IN-KIND, BY REASON OF HIS CONNECTION WI TH THE LAND, REQUIRES AS A DWELLING HOUSE, OR AS A STO RE-HOUSE, OR OTHER OUT-BUILDING, AND ( II ) THE LAND IS EITHER ASSESSED TO LAND REVENUE IN IN DIA OR IS SUBJECT TO A LOCAL RATE ASSESSED AND COLLECTED BY OFFICERS OF THE GOVERNMENT AS SUCH OR WHERE THE LAND IS NOT SO ASSESSED TO LAND REVENUE OR SUBJECT TO A LOCAL RATE, IT IS NOT SITUATED ( A ) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURISDI CTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHI CH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND [***]; OR [( B ) IN ANY AREA WITHIN THE DISTANCE, MEASURED AERIALL Y, ( I ) NOT BEING MORE THAN TWO KILOMETRES, FROM THE LOCA L LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM ( A ) AND WHICH HAS A POPULATION OF MORE THAN TEN THOUS AND BUT NOT EXCEEDING ONE LAKH; OR ( II ) NOT BEING MORE THAN SIX KILOMETRES, FROM THE LOCA L LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM (A) AND WHICH HAS A POPUL ATION OF MORE THAN ONE LAKH BUT NOT EXCEEDING TEN LAKH; OR ( III ) NOT BEING MORE THAN EIGHT KILOMETRES, FROM THE LO CAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM ( A ) AND WHICH HAS A POPULATION OF MORE THAN TEN LAKH. [[ EXPLANATION 1.]FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLAR ED THAT REVENUE DERIVED FROM LAND SHALL NOT INCLUDE AND SHALL BE DEEMED NEVER TO HAVE INCLUDED ANY INCOME ARISING FROM THE TRANSFER OF ANY LAND REFERRED TO IN ITEM ( A ) OR ITEM ( B ) OF SUB-CLAUSE ( III ) OF CLAUSE (14) OF THIS SECTION.] [ EXPLANATION 2 . FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED TH AT INCOME DERIVED FROM ANY BUILDING OR LAND REFERRED TO IN SUB-CLAUSE ( C ) ARISING FROM THE USE OF SUCH BUILDING OR LAND FOR ANY PURPOSE (INCLUDING LETTING FOR RESIDENTIAL PURPOSE OR FOR THE PURPOSE OF ANY BUSINESS OR PROFESSION) OTHER THAN AGRICULTURE FALLING UNDER SUB-CLAUSE ( A ) OR SUB-CLAUSE ( B ) SHALL NOT BE AGRICULTURAL INCOME.] [ EXPLANATION 3 . FOR THE PURPOSES OF THIS CLAUSE, ANY INCOME DERIVED FROM SAPLINGS OR SEEDLINGS GROWN IN A NURSERY SHALL BE DEEMED TO BE AGRICULTUR AL INCOME;] 8 [ EXPLANATION 4. FOR THE PURPOSES OF CLAUSE (II) OF THE PROVISO TO SUB-CLAUSE ( C ), 'POPULATION' MEANS THE POPULATION ACCORDING TO THE LAST PRECEDING CENS US OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR ;]. THEREFORE IN SIMPLE TERMS AGRICULTURAL INCOME WOULD INVOLVE ANY RENT OR REVENUE DERIVED FROM SUCH LAND OR INCOM E FROM AGRICULTURE ON SUCH AGRICULTURAL LAND. THE MEANING OF AGRICULTURE WAS DISCUSSED IN DETAIL IN THE CELEBRAT ED DECISION OF HON'BLE SUPREME COURT IN CASE OF CIT V. RAJA BENOY KUMAR SAHAS ROY (SUPRA). IN THIS CASE IT WAS OBSERVED AS UNDER: AGRICULTURE IN ITS PRIMARY SENSE DENOTES THE CULT IVATION OF THE FIELD AND IS RESTRICTED TO CULTIVATION OF TH E LAND IN THE STRICT SENSE OF THE TERM, MEANING THEREBY TILLI NG OF THE LAND, SOWING OF THE SEEDS, PLANTING AND SIMILAR OPERATIONS ON THE LAND. THESE ARE BASIC OPERATIONS AND REQUIRE THE EXPENDITURE OF HUMAN SKILL AND LABOUR U PON THE LAND ITSELF. THOSE OPERATIONS WHICH THE AGRICULTURIST HAS TO RES ORT TO AND WHICH ARE ABSOLUTELY NECESSARY FOR THE PURPOSE OF E FFECTIVELY RAISING PRODUCE FROM THE LAND, OPERATIONS WHICH ARE TO BE PERFORMED AFTER THE PRODUCE SPROUTS FROM THE LAND E .G. WEEDING, DIGGING THE SOIL AROUND THE GROWTH, REMOVA L OF UNDESIRABLE UNDERGROWTH, AND ALL OPERATIONS WHICH F OSTER THE GROWTH AND PRESERVATION OF THE SAME NOT ONLY FROM I NSECTS AND PESTS BUT ALSO FROM DEPRADATION FROM OUTSIDE, T ENDING, PRUNING, CUTTING, HARVESTING AND RENDERING THE PROD UCE FIT FOR THE MARKET WOULD ALL BE AGRICULTURAL OPERATIONS WHE N TAKEN IN CONJUNCTION WITH THE BASIC OPERATIONS. THE HUMAN L ABOUR AND SKILL SPENT IN THE PERFORMANCE OF THESE SUBSEQU ENT OPERATIONS CANNOT BE SID TO HAVE BEEN SPENT ON THE LAND ITSELF. THE MERE PERFORMANCE OF THESE SUBSEQUENT OPERATIONS ON THE PRODUCTS OF THE LAND, WHERE SUCH PRODUCTS HAVE NOT BEEN RAISED ON THE LAND BY THE PERFORMANCE OF THE BASIC OPERATIONS, WOULD NOT BE ENOUGH TO CHARACTERIZE THE M AS AGRICULTURAL OPERATIONS THESE SUBSEQUENT OPERATIONS MUST NECESSARILY BE IN CONJUNCTION WITH AND IN CONTINUAT ION OF THE BASIC OPERATIONS WHICH ARE THE EFFECTIVE CAUSE OF T HE PRODUCTS BEING RAISED FROM THE LAND. THE SUBSEQUEN T OPERATIONS DIVORCED FROM THE BASIC OPERATIONS CANNO T CONSTITUTE BY THEMSELVES AGRICULTURAL OPERATIONS. ONLY IF THIS INTEGRATED ACTIVITY WHICH CONSTITUTES AGRICULTURE IS UNDERTAKEN AND PERFORMED IN REGARD TO ANY LAND C AN THAT LAND BE SAID TO HAVE BEEN USED FOR AGRICULTURAL PU RPOSES AND THE INCOME DERIVED THEREFROM BE SAID TO BE AGR ICULTURAL INCOME DERIVED FROM THE LAND BY AGRICULTURE, U/S 2 (I) OF THE INDIAN INCOME-TAX ACT, 1922. AGRICULTURE COMPRISE WITHIN ITS SCOPE THE BASIC AS WELL AS THE SUBSEQUENT OPERATIONS DESCRIBED ABOVE REGARDLES S OF THE NATURE OF THE PRODUCTS RAISED ON THE LAND. THESE P RODUCTS MAY BE GRAIN OR VEGETABLE OR FRUITS WHICH ARE NECES SARY FOR THE SUSTENANCE OF HUMAN BEINGS, INCLUDING PLANTATI ONS AND GROVES, OR GRASS OR PASTURE FOR THE CONSUMPTION OF BEASTS OR ARTICLES OF LUXURY, SUCH AS BETEL, COFFEE, TEA, SPI CES, TOBACCO OR COMMERCIAL CROPS LIKE COTTON, FLAX, JUTE, HEMP, INDIGO. ALL THESE ARE PRODUCTS RAISED FROM THE LAND BUT THE TER M 9 AGRICULTURE CANNOT BE CONFINED MERELY TO THE PRODUC TION OF GRAIN AND FOOD PRODUCTS FOR HUMAN BEINGS AND BEASTS ; IT MUST BE UNDERSTOOD AS COMPRISING ALL THE PRODUCTS O F THE LAND WHICH HAVE SOME UTILITY EITHER FOR CONSUMPTION OR FOR TRADE AND COMMERCE AND WOULD ALSO INCLUDE FOREST PR ODUCTS SUCH AS LIMBER AND SAL AND PIYASAL TREES, CASUARINA S PLANTATIONS, TENDU LEAVES AND HORRA NUTS. THERE IS NO WARRANT AT ALL FOR EXTENDING THE TERM AGRICULTURE TO ALL ACTIVITIES WHICH HAVE SOME REL ATION TO THE LAND OR ARE IN ANY WAY CONNECTED WITH THE LAND FOR THE TERM AGRICULTURE CANNOT BE DISSOCIATED FROM THE PRI MARY SIGNIFICANCE THEREOF WHICH IS THAT OF CULTIVATION O F THE LAND. THE EXTENSION OF THE TERM AGRICULTURE TO D ENOTE SUCH ACTIVITIES AS BREEDING AND REARING LIVE STOCK, DAIRY FARMING, BUTTER AND CHEESE MAKING, AND POULTRY FARM ING, IS AN UNWARRANTED DISTORTION OF THE TERM . THE ABOVE CLEARLY SHOWS THAT AGRICULTURE CAN BE PER FORMED ONLY ON LAND AND WHICH INVOLVE BASIC OPERATIONS LIK E TILLING OF LAND, SOWING OF THE SEEDS, PLANTING AND SIMILAR OPERATIONS ON THE LAND. IN CASE BEFORE US NO TILLIN G OR PLANTING HAS BEEN DONE. ADMITTEDLY THERE IS NO LAN D ON WHICH TILLING OPERATIONS ETC. IS CARRIED OUT. AS S TATED BY THE ASSESSING OFFICER THE ENTIRE ACTIVITY IS CARRIE D ON AS A BUSINESS IN RESIDENTIAL AREA AND MUSHROOMS ARE GROW N UNDER CONTROLLED CONDITIONS. THE BASIC OPERATIONS WHICH ARE REQUIRED BY AN AGRICULTURIST ON THE LAND ARE MI SSING IN THE ASSESSEES CASE. EVEN IF, GROWING OF MUSHROOM NECESSARILY INVOLVE USE OF SOME SOIL, IT COULD NOT BY ITSELF AMOUNT TO CARRYING ON A PRIMARY AGRICULTURAL OPERAT ION IN THE SENSE OF CULTIVATION OF THE SOIL. THE ASSESSEE HAS FAILED TO EXPLAIN AS TO HOW IT CAN BE CLAIMED THAT BASIC AGRICULTURAL OPERATIONS WERE CARRIED OUT IN MUSHROO M PRODUCTION AND HOW EXPENDITURE IS INCURRED ON PRIMA RY OPERATIONS I.E. PLANTING OF MUSHROOM ETC. AND IN TH E SECONDARY OPERATIONS FOR PRESERVING IT AND MAKING I T MARKETABLE. IN THE LIGHT OF THESE FACTS IN OUR CON SIDERED VIEW, THE ASSESSING OFFICER HAS RIGHTLY TREATED THE INCOME FROM GROWING OF MUSHROOM AS NON AGRICULTURAL INCOME . 10 13 APART FROM ABOVE THERE IS A FURTHER CONDITION TH AT SUCH LAND SHOULD BE ASSESSED TO LAND REVENUE WHICH HAS ALSO NOT BEEN FULFILLED BY THE ASSESSEE. THERE IS YET ANOTHER CONDITION THAT SUCH LAND SHOULD NOT BE SITU ATED WITHIN MUNICIPAL LIMITS WHEREAS THE ASSESSING OFFIC ER HAS GIVEN A CLEAR CUT FINDING THAT THE SHED IN WHICH MU SHROOMS WERE GROWN BY THE ASSESSEE, IS LOCATED WITHIN THE RESIDENTIAL AREA OF JAGADHARI WHICH IS SITUATED WI THIN MUNICIPAL LIMITS. THEREFORE IN VIEW OF THESE FACTS ALSO THE INCOME EARNED BY THE ASSESSEE FROM GROWING OF MUSHR OOMS CANNOT BE TREATED AS AGRICULTURAL INCOME. IN VIEW THIS LEGAL POSITION WE UPHOLD THE ORDER OF THE LD. CIT(A). 14 IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.10.2014 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28.10.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR