Smt. Sneh Kumar, New Delhi V. ITO, New Delhi

ITA 5369/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74054 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 20-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 19-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA
• Section: 133(6)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI T.S. KAPOOR ITA NO. 5369/DEL/2012 ASSTT. YR: 2009-10 SMT. SNEH KUMAR, VS. INCOME-TAX OFFICER, E-969, LGF CHITRANJAN PARK, WARD 18(3), NEW DELHI . NEW DELHI. PAN : AANPK 0871 C ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI RAHUL KHARE ADV. RESPONDENT BY : SMT. RENUKA JAIN GUPTA SR. DR O R D E R PER R.P. TOLANI, J.M: : THIS IS ASSESSEES APPEAL ARISING OUT OF CIT(A)-XX I, NEW DELHIS ORDER DATED 30-07-2012 RELATING TO A.Y. 2009-10. 2. BRIEF FACTS ARE: THE ASSESSEE CLAIMS TO BE IN TH E BUSINESS OF SUPPLYING POTTED PLANTS, FLOWERS AND MAINTENANCE OF GARDEN. T HE CONCERN SPECIALIZES IN GROWING SPECIAL TYPES OF POTTED PLANTS USED IN AIR- CONDITIONED OFFICES. THEIR MAIN CLIENTS ARE MULTINATIONAL COMPANIES AND BIG C OMPANIES LIKE DLF LTD. ETC. FOR THIS PURPOSE ASSESSEE HAS TAKEN 3 ACRES OF LAND ON LEASE IN VILLAGE GARHI HARSU, DISTT. GURGAON. IN ORDER TO CARRY ON I TS ACTIVITIES THE ASSESSEE PURCHASES SMALL PLANTS OF REQUIRED QUALITY, TRANSPL ANT THEM IN THEIR NURSERY/ GREEN HOUSE, GROW THEM TO MEET THE SPECIFIC REQUIRE MENTS OF THEIR CLIENTS. 2 THE ASSESSEE DERIVED INCOME FROM THESE OPERATIONS A ND CLAIMED THEM TO BE AGRICULTURAL INCOME. IT IS ALSO PLEADED THAT IN PRE VIOUS YEARS THIS INCOME HAS BEEN ACCEPTED BY THE DEPARTMENT AS AGRICULTURE INCO ME INCLUDING IN AN ASSESSMENT PASSED U/S 143(3). AO, HOWEVER, HELD AS UNDER: ASSESSEE IS SIMPLY DOING TRADING OF PLANTS UNDER T HE GUISE OF NURSERY. NO AGRICULTURAL ACTIVITY IS CARRIED OUT BY ASSESSEE BASED ON THE RATIO LAID DOWN BY HONBLE SUPREME COURT IN THE CAS E OF RAJA BONOY KUMAR SUHAS RAI (1957) 32 ITR 466 (SC) ACCORD ING TO WHICH AGRICULTURE IN ITS PRIMARY SENSE DENOTED TH E CULTIVATION OF FIELD AND IS RESTRICTED TO CULTIVATION OF LAND I N THE STRICT SENSE OF THE TERM MEANING THEREBY TILLING, SOWING THE SEE DS, PLANTING AND SIMILAR OPERATION ON THE LAND. 2.1. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL WHE RE THE CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER BY FOLLOWI NG OBSERVATIONS: IN THIS REGARD AO RELIED ON THE ORDER OF HONBLE S UPREME COURT IN THE CASE OF M/S RAJA BINOY KUMAR SUHAS RAI 32 ITR 466 (SC), WHEREIN, HONBLE SUPREME COURT HAS DEFINE D THE AGRICULTURAL ACTIVITIES. THE CONCLUSION DRAWN BY TH E HONBLE SUPREME COURT IS THAT SUBSEQUENT OPERATION DIVORCED FROM THE BASIC OPERATIONS CANNOT CONSTITUTE BY THEMSELVES AG RICULTURAL OPERATIONS. THE AO HAS FURTHER RELIED ON THE DECISI ON OF DELHI ITAT IN THE CASE OF SUDHISHA FAR NURSERY VS. ITO 88 ITD 638, WHEREIN, IT HAS BEEN HELD THAT, PART OF PROFIT ARI SING FROM PURCHASE AND SALE OF PLANTS IS NOT AGRICULTURAL INC OME EVEN THOUGH SUCH PLANTS ARE MAINTAINED IN NURSERY FOR SO ME TIME. IN THE BODY OF ASSESSMENT ORDER AO HAS DISCUSSED T HE ISSUE AT PAGE NO. 2 AND 3 WHERE HE HAS CITED 10 EXAMPLES OF PURCHASES DONE BY THE APPELLANT IN THIS REGARD AND HE HAS ALS O GATHERED INFORMATION U/S 133(6) OF THE IT ACT, NAMELY, FROM M/S SAHIL NURSERY AND FROM THE INFORMATION GATHERED AO HAS A RRIVED AT 3 THE CONCLUSION THAT ASSESSEE IS PURCHASING PLANTS F ROM SAHIL NURSERY AND SELLING THE SAME TO CLIENTS. THUS ASSES SEE IS NOT CARRYING OUT ANY AGRICULTURAL ACTIVITY AND INDULGIN G IN TRADING OF PLANTS, SO ASSESSEE IS DOING THE BUSINESS ACTIVI TIES. THE CASE LAWS RELIED UPON BY THE LD. AR OF THE APPELLANT ARE DISTINGUISHABLE ON FACTS. FURTHER MORE, LD. AR OF T HE APPELLANTS RELIANCE ON THE ORDER OF THE AO FOR ASSESSMENT YEA R 2008-09 IS OF NO HELP WHEREIN, AO HAS ACCEPTED THE ACTIVITY O F THE APPELLANT AS AGRICULTURAL ACTIVITY BECAUSE IN INCOM E TAX PROCEEDINGS RES JUDICATA DO NOT APPLY AS HAS BEEN H ELD BY FOLLOWING JUDICIAL AUTHORITIES:- I) CIT VS. SYED SADDIQUE IMAM & OTHERS (PATNA) 111 ITR 475. II) TAMILNADU CHLORATES VS. CIT (ITAT, CHENNAI)98 I TD 1. III) NEW JEHANGIR VAKIL MILLS CO. LTD. VS. CIT (SC) 49 ITR 137. IV) KOTAK MAHINDRA FINANCE LTD. VS. DCIT (BOM) 265 ITR 114. V) K. BHASKARAN NAIR VS. CIT (KER) 177 TAXMAN 478. THUS, RELIANCE ON THE JUDGMENT OF HONBLE SUPREME C OURT IN THE CASE OF RAJA BINOY KUMAR SUHAS RAI 32 ITR 466 ( SC) AND ITAT IN THE CASE OF SUDHISHA FARM NURSERY IS APPRE CIATED AND I AM FULLY CONVINCE D THAT ACTIVITIES DONE BY THE A PPELLANT ARE IN THE NATURE OF BUSINESS ACTIVITIES WHICH IS APPARENT FROM THE VARIOUS INSTANCES MENTIONED BY AO IN THE ASSESSMEN T ORDER. THUS GROUND NO.2 OF THE APPELLANT IS DISMISSED. STILL AGGRIEVED, ASSESSEE IS BEFORE US. 3. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE O BSERVATION OF ASSESSING OFFICER THAT ASSESSEE IS TRADING IN PLANT S IS NOT CORRECT. ASSESSEE BUYS SMALL PLANTS AND SEEDS, NURSES AND GROW THEM I N NURSERY UNDER SPECIFIC ENVIRONMENTAL CONDITIONS AND WHEN THEY ATTAIN REQUI SITE GROWTH THEY ARE 4 REPLANTED IN POTS AND SOLD TO CLIENTS. THUS IT IS N OT THE TRADING OF PLANTS SIMPLICITOR BUT FULL FLEDGED AGRICULTURE/ FLORICULT URAL OPERATIONS. 3.1. LD. COUNSEL CONTENDS THAT THE RATIO OF DECISIO N IN THE CASE OF RAJA BINOY KUMAR SUHAS RAI 32 ITR 466 (SC), RELIED BY TH E ASSESSING OFFICER IS NOT APPLICABLE TO ASSESSEES CASE IN AS MUCH AS IT IS DISTINGUISHABLE. RELIANCE IS PLACED ON THE RATIO OF DECISIONS IN THE CASES OF : (1) CIT V. GREEN GOLD TREE FARMERS (P) LTD. (2008) 167 TAXMAN 151 (UK); (2) CIT V. SOUNDARYA NURSERY (2000) 241 ITR 530 (MAD.); AND (3) DCIT VS. BEST ROSES BIOTECH (P) LTD. 2011 (ITAT AHM EDABAD). 3.2. IT IS CONTENDED THAT THE ACTIVITY CARRIED OUT BY THE ASSESSEE BEING ON AGRICULTURAL LAND, ON WHICH PLANTS ARE PLANTED, NOU RISHED AND THEN REPLANTED IN POTS, IS AGRICULTURAL ACTIVITY, THEREFORE, THE O RDERS OF LOWER AUTHORITIES SHOULD BE REVERSED. 4. LD. DR ON THE OTHER HAND VEHEMENTLY ARGUES THAT THE ASSESSING OFFICER GATHERED INFORMATION U/S 133(6) WHICH ESTABLISHED T HE FACT THAT THE ASSESSEE WAS PURCHASING PLANTS FROM SAHIL NURSERY AND WHAT H E WAS SELLING AGAIN ARE THE PLANTS. THUS, THERE IS NO NEW PRODUCT WHICH COM ES INTO EXISTENCE WHICH CAN BE TERMED AS AGRICULTURAL PRODUCE FROM AGRICULT URAL OPERATIONS. THE AGRICULTURAL OPERATIONS AS HELD BY HONBLE SUPREME COURT ARE TO BE BASED ON TILLING, SOWING AND CONDUCTING REGULAR AGRICULTU RAL ACTIVITY AND IT DOES NOT 5 MEAN A FANCY OPERATION OF REPLANTING, NURSERY PLANT S TO MAKE THEM FIT FOR AIR- CONDITIONER. THIS CANNOT BE HELD AS AGRICULTURAL AC TIVITY. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW RATIO OF DECISION IN THE CASE OF RAJA BINOY KUMAR SUHAS RAI (SUPRA) IS SQUARELY APPLICABLE TO A SSESSEES CASE. IT HAS NOT BEEN DISPUTED THAT WHAT ASSESSEE PURCHASES FROM M/S SAHIL NURSERY WERE ONLY THE PLANTS WHICH WERE REPLANTED IN GREEN HOUSE AND GROWN TO A PARTICULAR CONDITION SUITED FOR AIR-CONDITIONED ATM OSPHERE. IN OUR CONSIDERED VIEW IT DOES NOT AMOUNT TO AGRICULTURE ACTIVITY. TH E ORDERS OF LOWER AUTHORITIES ARE UPHELD. 6. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 24-01-2014. SD/- SD/- ( T.S. KAPOOR ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24-01-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR