JCIT, Bangalore V. M/s Namdhari Seeds, Bangalore

ITA 513/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57486 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 04-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: FARAHAT HUSSAIN QURESHI CITII
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Business income
• Section: 143(3); 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K. , JUDICIAL MEMBER ITA NOS.513 & 514/BANG/2011 ASSESSMENT YEARS : 2007-08 & 2008-09 THE JOINT COMMISSIONER OF INCOME TAX (OSD), RANGE 2, CIRCLE 2(1), BANGALORE. VS. M/S. NAMDHARI SEEDS, NO.119, 9 TH MAIN ROAD, IDEAL HOMES TOWNSHIP, RAJARAJESHWARI NAGAR, BANGALORE - 560 098. PAN: AABFN 0971G APPELLANT RESPONDENT APPELLANT BY : SHRI FARAHAT HUSSAIN QURESHI, CIT-II (DR) RESPONDENT BY : SHRI PADAMCHAND KHINCHA, C.A. DATE OF HEARING : 27.02.2012 DATE OF PRONOUNCEMENT : 27.02.2012 O R D E R PER N.K. SAINI, ACCOUNTANT MEMBER THESE TWO APPEALS BY THE DEPARTMENT ARE DIRECTED A GAINST THE SEPARATE ORDERS EACH DATED 31.01.2011 OF THE CIT(AP PEALS)-I, BANGALORE. SINCE COMMON ISSUES ARE INVOLVED IN BOTH THESE APPE ALS, SO THESE ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR TH E SAKE OF CONVENIENCE. ITA NOS.513 & 514/BANG/2011 PAGE 2 OF 6 2. THE GROUNDS RAISED IN ITA NO.513/BANG/2011 FOR T HE ASSESSMENT YEAR 2007-08 READ AS UNDER: 1. THE ORDER OF THE LEARNED CIT (APPEALS), IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(APPEALS) WAS NOT JUSTIFIED DEL ETING THE ADDITION TO THE EXTENT OF 69,54,076-00 MADE AS INC OME FROM BUSINESS ON ACCOUNT OF DISALLOWANCE OF CLAIM OF AG RICULTURAL INCOME, WITHOUT APPRECIATING THE FACTS AND CIRCUMST ANCES UNDER WHICH THE ADDITION WAS MADE BY THE ASSESSING OFFICE R. 3. THE LEARNED CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE PROFIT ARISING FROM FOUNDATION SEEDS OR HYBRID SEED S PRODUCED ON OWN LAND OR LANDS TAKEN ON LEASE WILL CONSTITUTE AG RICULTURAL INCOME. 4. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THE PROCESS AND TECHNICAL SKILLS INVOLVED IN THE ASSESSEE'S CAS E VIS A VIS THE NORMAL PROCESS INVOLVED IN AGRICULTURE IN GENERAL U NDERSTANDING FOR TREATING PART OF THE INCOME AS 'NON-AGRICULTURA L INCOME' BY THE AO DURING THE ASSESSMENT PROCEEDINGS. 5. THE LEARNED CIT(A) ERRED IN FOLLOWING THE DECIS ION OF THE TRIBUNAL IN THE CASE OF M/S NAMDHARI SEEDS PVT LTD IN ITA NO. 3102/BANG/2004 DT. 14.7.2006, WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND IN SIMILAR CASES, APPEALS HAVE B EEN FILED BEFORE THE HIGH COURT U/S 260A OF THE I T ACT, 1961 . 6. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT(A) BE REVERSED IN SO FAR THE ABOVE ISSUE IS CONCERNED AND THAT OF THE A.O BE RESTORED. 7. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR TO DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 3. GROUND NOS. 1, 6 & 7 ARE GENERAL IN NATURE, SO D O NOT REQUIRE ANY COMMENTS ON OUR PART. ITA NOS.513 & 514/BANG/2011 PAGE 3 OF 6 4. GROUND NOS. 2 TO 5 RELATES TO THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION MADE BY THE AO TO THE EXTENT OF RS.69, 54,076 CONSIDERING THE SAME AS INCOME FROM BUSINESS INSTEAD OF AGRICULTURA L INCOME CLAIMED BY THE ASSESSEE. 5. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE FILED ITS RETURN OF INCOME ON 30.10.2007 DECLARING AN INCOME OF RS.67,2 9,523. THE SAID RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE IN COME TAX ACT, 1961 (HEREIN AFTER REFERRED AS THE ACT). LATER ON THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT REJE CTING THE CLAIM OF AGRICULTURAL INCOME AMOUNTING TO RS.77,26,751 AND T REATED THE SAME AS BUSINESS INCOME AND MADE ADDITION. 6. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A ). THE LD. CIT(A) WHO, OUT OF THE ABOVE ADDITION, RESTRICTED THE ADDI TION TO RS.6,61,189 OBSERVING AS UNDER: 4. SRI NAGIN KHINCHA, C.A., A.R. APPEARED AND ARGU ED THE CASE. HE WAS HEARD. HE PLEADED THAT THE ISSUE OF D ISALLOWANCE OF CLAIM U/S. 10(1) NOW STANDS SETTLED BY THE ITAT DEC ISION IN THE CASE OF M/S. NAMDHARI SEEDS PRIVATE LIMITED A GROUP CONCERN INVOLVED IN SIMILAR ACTIVITIES VIDE ITA NO.3102/BAN G/2004 DATED 14.07.2006 THE APPEAL OF DEPARTMENT TO HIGH COURT B EING DISMISSED. AS PER THIS ORDER, 10% OF THE INCOME HA S TO BE TREATED AS INCOME UNDER THE HEAD BUSINESS AND THE REST 90 % HAS TO BE TREATED AS AGRICULTURAL INCOME. RESPECTFULLY FOL LOWING THE SAME, THE ADDITION IS RESTRICTED TO RS.6,61,189/- O NLY. APPELLANT GETS PART RELIEF. APPEAL IS ALLOWED PARTLY ON THIS ISSUE. 7. NOW THE DEPARTMENT IS IN APPEAL. DURING THE COU RSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE WAS FAIR ENOUGH TO CONCEDE THAT THE ISSUE ITA NOS.513 & 514/BANG/2011 PAGE 4 OF 6 HAS NOW BEEN DECIDED AGAINST THE ASSESSEE BY THE HO N'BLE JURISDICTIONAL HIGH COURT VIDE SEPARATE JUDGMENTS EACH DATED 24.10 .2011 IN ITA NO.75/2007 AND OTHERS, ITA NO.1282-1284/2006 AND IT A NOS.75, 71 & 76/2008 (COPIES OF THE SAID ORDERS WERE FURNISHED) AND EVEN BY THE DECISION OF THIS BENCH OF THE TRIBUNAL IN ITA NOS.3 82, 383 & 385/BANG/2011 IN THE ASSESSEES OWN CASE VIDE ORDER DATED 01.02.2011. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO END ORSED THE ABOVE CONTENTION AND SUBMITTED THAT THE ISSUE IS NOW SETT LED AGAINST THE ASSESSEE BY THE HON'BLE JURISDICTIONAL HIGH COURT VIDE JUDG MENT DATED 24.10.2011. 9. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES AND MATERIAL AVAILABLE ON RECORD, IT APPEARS THAT THE MAIN ISSUE IS RELATED TO THE NATURE OF INCOME WHICH WAS CLAIMED BY THE ASSESSEE AS AGRICUL TURAL INCOME AND CONSIDERED BY THE ASSESSING OFFICER AS BUSINESS INC OME. THIS CONTROVERSY HAS NOW BEEN SETTLED IN ASSESSEES OWN CASE BY THE HON'BLE JURISDICTIONAL HIGH COURT VIDE JUDGMENT DATED 24.10.2011 IN ITA NO S.1282-1284/2006 AND ITA NOS.75, 71 & 76/2008 (SUPRA) WHEREIN THE RE LEVANT FINDINGS HAVE BEEN GIVEN IN PARA 17 OF THE SAID ORDER WHICH READ AS UNDER : THERE WAS NO DISCUSSION AS TO HOW THE SAID CONCLU SION WAS ARRIVED AT EXCEPT EXTRACTING THE CONTENTIONS OF THE ASSESSEE. THERE WAS NO CONSIDERATION OF THE FACTS AS PLEADED BY THE ASSESSEE ITSELF FOR THE PREVIOUS ASSESSMENT YEARS O R THE ASSESSMENT YEARS IN QUESTION. THUS, THERE WAS AN I NCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW WHICH WOULD SATISFY THE REQUIREMENT OF ORDER BEING ERRONEOUS. A PERUSAL OF THE ORDER OF THE ASSESSING OFFICER WOULD NOT DEPICT THAT HE HAS CHOSEN ONE FROM OUT OF THE TWO COURSES AVAILABLE OR PERMISSIBLE. THUS ON FACTS, THE ASSESSEE HIMSELF HAVING TREATED THE INCOME AS BUSINESS INCOME HAD SUDDENLY CHANGED TO THE HEADI NG AGRICULTURAL INCOME AND HENCE, THERE WERE NO TWO VIEW AVAILABLE TO THE ASSESSING OFFICER EVEN IF SO, IT I S NOT STATED IN THE ORDER AS TO WHAT ARE THOSE TWO VIEWS AND AS TO HOW HE INTENDS TO ITA NOS.513 & 514/BANG/2011 PAGE 5 OF 6 ADOPT ONE OUT OF THESE TWO VIEWS. IN VIEW OF THE SA ME, WE ARE OF THE CONSIDERED VIEW, THE JUDGMENTS RELIED UPON BY T HE LEARNED COUNSEL APPEARING FOR THE ASSESSEE ARE INAPPLICABLE AND THE SUBSTANTIAL QUESTIONS OF LAW REQUIRES TO BE ANSWERE D IN THE NEGATIVE AND THE ORDER PASSED BY THE TRIBUNAL REQUI RES TO BE SET ASIDE AND THE ORDER PASSED BY THE COMMISSIONER FOR INCOME TAX IS TO BE RESTORED. 10. AS REGARDS TO THE NATURE OF INCOME EARNED BY TH E ASSESSEE, THE HON'BLE JURISDICTIONAL HIGH COURT IN PARA 58 OF THE AFORESAID ORDER DATED 24.10.2011 IN ITA NO.75/2007 AND OTHERS IN ASSESSEE S OWN CASE OBSERVED AS UNDER : THEREFORE THE VIEW OF THE FIRST APPELLATE AUTHORI TY THAT 100% OF THE OPERATIONS UPTO CONVERSION OF THE FOUNDATION SE EDS AS AGRICULTURAL ACTIVITY CONDUCTED BY THE ASSESSEE COM PANY AND THEREFORE INCOME DESERVES TO BE EXEMPTED FROM TAX U NDER SECTION 10(1) OF THE ACT IS ERRONEOUS. SIMILARLY EXEMPTION GIVEN BY THE TRIBUNAL FOR 90% OF THE INCOME IS ALSO ERRONEOUS. WE OPINE THAT THE TRIBUNAL WAS JUSTIFIED IN TREATING 10% OF THE I NCOME AS BUSINESS INCOME WHICH INVOLVED PROCESSING OF FOUNDA TION SEEDS TO CERTIFIED SEEDS. IN THAT VIEW OF THE MATTER, WE HOLD THAT THE ENTIRE INCOME AMOUNTS TO BUSINESS INCOME OF THE ASS ESSES AND ASSESSING OFFICER WAS JUSTIFIED IN TREATING THE TOT AL INCOME AS BUSINESS INCOME. 11. THEREFORE, CONSIDERING THE TOTALITY OF THE FACT S AS DISCUSSED HEREIN ABOVE, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE H ONBLE JURISDICTIONAL HIGH COURT DATED 24.10.2011 IN ITA NOS.1282-1284/2006 A ND ITA NOS.75, 71 & 76/2008 (SUPRA), WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND RESTORE THE ORDER OF THE ASSESSING OFFICER. 12. IN ITA NO.514/BANG/2011 FOR THE A.Y. 2008-09, T HE GROUNDS RAISED BY THE DEPARTMENT ARE IDENTICAL AS WERE RAISED IN I TA NO.513/BANG/2011 FOR THE A.Y. 2007-08, THE ONLY DIFFERENCE IS THAT T HE AMOUNT INVOLVED AS ITA NOS.513 & 514/BANG/2011 PAGE 6 OF 6 MENTIONED IN GROUND NO.2 IS RS.1,64,80,279 AS AGAIN ST RS.69,54,076 INVOLVED FOR THE A.Y. 2007-08. SINCE THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS INVOLVED I N THE PRECEDING YEAR I.E. A.Y. 2007-08, THEREFORE OUR FINDINGS GIVEN IN THE F ORMER PART OF THIS ORDER SHALL APPLY MUTATIS MUTANDIS FOR THE APPEAL IN ITA NO.514/BANG/2011 FOR THE A.Y. 2008-09. 13. IN THE RESULT, BOTH THE APPEALS OF THE DEPARTME NT ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF FEBRUARY, 2012. SD/- SD/- ( GEORGE GEORGE K. ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 27 TH FEBRUARY , 2012. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.