DCIT, Circle-3(1), Hyderabad, Hyderabad V. Seed Innovatioin Private Limited, Hyderabad, Hyderabad

ITA 659/HYD/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4700 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-10-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 10-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHANA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B ', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 659 / HYD/201 7 ASSESSMENT YEAR: 20 12 - 13 DY . COMMISSIONER OF INCOME - TAX, CIRCLE 3 (1), HYDERABAD VS. SEED INNOVATIONS PVT. LTD., HYDERABAD. PAN A AICS0120J APPELLANT RESPONDENT RE VENUE BY: S MT. ALKA RAJVANSHI JAIN A SSESSEE BY: SHRI P. MURALI MOHANA RAO DATE OF HEARING: 09 / 10 / 201 8 DATE OF PRONOUNCEMENT: 26 / 1 0 /201 8 O R D E R PER S. RIFAUR RAHMAN , AM: T H IS APPEAL IS FILED BY THE REVENUE AGAINST ORDER OF C IT (A) - 3 , HYDERABAD , DATED 2 3 / 0 1 /201 7 FOR AY 20 12 - 13. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE , ENGAGED IN THE BUSINESS OF RESEARCH, DEVELOPMENT PRODUCTION AND TRADING HYBRID SEEDS IN CROPS LIKE MAIZE, SUNFLOWER, BAZRA, JOWAR COTTON AND RICE, FILED RETURN OF INCOME OF RS. 5,72,54,530/ - FOR AY 2012 - 13 ON 29/09/2012. IN THE RETURN OF INCOME, THE ASSESSEE CLAIMED AGRICULTURAL INCOME OF RS. 7,05,65,970/ - AS EXEMPT U/S 10(1). THE AO DENIED EXEMPTION CLAIMED U/S 10(1) AND ASSESSED THE INCOME AT RS. 12,83,20,497/ - ON THE FOLLOWING GROUNDS: A) THAT THE ASSESSEE CANNOT SPLIT HIS ACTIVITIES AND TREAT PART OF IT AS AGRICULTURAL INCOME AND PART OF IT AS BUSINESS. I.T.A. NO. 659 /HYD/201 7 SEED INNOVATIONS PVT. LTD., HYD. 2 B) UPTO THE PRODUCTION OF FOUNDATION SEED THE ACTIVITY IS MORE OF SCIENTIFIC RESEARCH, WHICH IS NON - AGRICULTURAL IN NATURE. C) FOUNDATION SEED IS NOT FIT FOR HUMAN CONSUMPTION. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE FOUNDATION SEED SOLD BY IT IS AS RESULT OF PRIMARY AGRICULTUR AL OPERATION INVOLVING HUMAN SKILL AND EFFORT, THEREFORE, IT IS AGRICULTURAL IN NATURE. FURTHER, IT WAS SUBMITTED THE AOS OBSERVATION THAT THE FOUNDATION SEED IS NOT FIT FOR HUMAN CONSUMPTION IS NOT A FACTOR FOR DECIDING WHETHER THE INCOME IS AGRICULTURAL OR NOT. ASSESSEE RELIED ON VARIOUS DECISIONS OF TRIBUNAL INCLUDING THE DECISION IN ITS OWN CASE FOR AY 2010 - 11 IN ITA NO. 1415/HYD/2013, DATED 17/04/2015. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) FOLLOWING THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. RAJA BENOY KUMAR [1957] 32 ITR 466 AS WELL DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR AY 2010 - 11 (SUPRA) HELD THAT THE INCOME OF ASSESSEE IS AGRICULTURAL INCOME, THEREFORE, THE APPEAL IS ALLOWED. 6. AGGRIEVE D BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL IS BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT (A) ERRED BOTH IN LAW AND ON FACTS OF THE CASE . 2. THE LD. CIT (A) ERRED IN DELETING THE DISALLOWANCE OF DEDUCTION MADE U/S.10(1) OF THE ACT, BY THE ASSESSING OFFICER OF RS.7,05,65,970/ - . 3. THE LD. CIT(A) ERRED IN HOLDING THAT THE INCOME DERIVED ON SALE OF FOUNDATION SEEDS AS INCOME FROM AGRICULTURAL OPERATIONS AND IS ELIGIBLE FOR DEDUCTION U/S. 10(1) OF THE ACT. I.T.A. NO. 659 /HYD/201 7 SEED INNOVATIONS PVT. LTD., HYD. 3 4. ANY OTHER GROUND(S) THAT MAY BE URGED AT THE TIME OF HEARING. 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ISSUE IN DISPUTE IS SQUARELY COV ERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2010 - 11 (SUPRA). THE LD. DR NEITHER CONTROVERTED THE ABOVE FACT NOR BROUGHT ANY CONTRARY DECISION IN THIS REGARD. THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2010 - 11, HAS OBSERVED AS UNDER: 3. AFTER CONSIDERING RIVAL CONTENTIONS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). IN THE CASE OF VIBHA AGROTECH LIMIT E D (SUPRA), THE I TAT CONSIDERED THE FACTS OF THE CASE AND HELD AS UNDER: '5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION O F THE COORDINATE BENCH IN ASSESSEE'S OWN CASE F OR AYS 2002 - 03, 2004 - 05 AND 2005 - 06 IN ITA NOS. 469/H/2008 AND OTHERS VIDE ORDER DATED 18/06/2010. A COPY O F THE SAID ORDER IS AVAILABLE ON RECORD. THE RELEVANT F INDINGS O F THE COORDINATE BENCH ARE EXTRACTED BELOW: '4. THE ISSUES RAISED IN THE REVENUE APPEALS HAS BEEN SQUARELY COVERED BY THE ORDER O F THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2001 - 02 REPORTED IN 314 ITR ( AT) 23 1 HYDERABAD WHEREIN IT WAS HELD THAT: THE ASSESSEE WAS CARRYING ON AGRI CULTURAL OPERATIONS AND GROWING BASIC SEEDS ON THE LANDS. IT WAS NOT THE CASE OF THE REVENUE THAT WITHOUT PERFORMING THE BASIC OPERATIONS, THE SUBSEQUENT OPERATIONS HAD BEEN CARRIED ON BY THE ASSESSEE. THE BASIC SEEDS WERE SOLD BY THE ASSESSEE ONLY AS A RE SULT OF THE BASIC OPERATIONS THAT HAD BEEN CARRIED ON BY IT AND ON EXPENDING HUMAN SKILL AND LABOUR THEREON AND ONLY AFTER PERFORMING OPERATIONS SUCH AS W EEDIN G , WATERING, MANURING, ETC. THE RESULTANT PRODUCT WAS GROWN AND MADE READY FOR SALE IN THE FORM O F BASIC SEEDS. THUS THE BASIC SEEDS SOLD BY THE ASSESSEE WERE THE RESULT OF PRIMARY AS WELL AS SUBSEQUENT OPERATIONS INVOLVING HUGE SKILL AND EFFORTS AND THE INCOME THERE FROM WAS AGRICULTURAL INCOME AS PROVIDED U/S 2( 1 A) OF THE ACT TO EXEMPTION U/S 1 0 (1) OF I.T.A. NO. 659 /HYD/201 7 SEED INNOVATIONS PVT. LTD., HYD. 4 THE ACT. THE ASSESSING OFFICER WAS TO TREAT THE INCOME FROM BASIC SEEDS AS AGRICULTURAL INCOME AND ALLOW EXEMPTION ULS 10(1) OF THE ACT. 5. IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, WE ARE INCLINED TO AGREE WITH THE FINDINGS OF THE CIT(A) ON THIS IS SUE AND ACCORDINGLY THE APPEALS OF THE REVENUE ARE DISMISSED.' 4. SINCE THE ISSUE UNDER CONSIDERATION IS IDENTICAL TO THE ISSUE DECIDED BY THE ITAT IN THE ABOVE SAID DECISION, RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDER OF CIT(A) IN DIRECTING TH E AO TO TREAT THE INCOME OF RS .4, 84,82,332/ - CLAIMED AS AGRICULTURAL INCOME AND ALLOW EXEMPTION U/S. 10(1) ON THE SAME. AS THE ISSUE UNDER CONSIDERATION IS MATERIALLY IDENTICAL TO THAT OF AY 2010 - 11, FOLLOWING THE DECISION THEREIN, WE UPHOLD THE ORDER O F CIT(A) IN DIRECTING THE AO TO TREAT THE INCOME OF RS. 7,05,65,970/ - AS AGRICULTURAL INCOME AND ALLOW EXEMPTION U/S 10(1) OF THE ACT. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER , 2018. SD/ - ( P. MADHAVI DEVI ) JUDICIAL MEMBER SD/ - ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 26 TH OCTOBER , 2018 KV COPY FORWARDED TO: 1. D CIT, CIRCLE 3 (1), ROOM NO. 714 , 7 TH FLOOR, SIGNATURE TOWES, OPP. BOTANICAL GARDEN, KONDAPUR, HYD. 2 . M/S SEED INNOVATIONS PVT. LTD., 501, 6 - 3 - 1090/A/1, SUBHAN SIRISAMPADA APTS., SOMAJIGUDA, HYD. 3 . CIT (A) - 3 , HYDERABAD 4. PR. CIT - 3 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE