M/s Synergy Images Pvt. Ltd., Bangalore V. CIT, Bangalore

ITA 816/BANG/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1468 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 20-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DR P K SRIHARI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO.816/BANG/2014 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER, WARD 12(1), BANGALORE. VS. M/S. PODS BIOTECH PVT. LTD., NO.325/1, 5 TH CROSS, 14 TH MAIN, RMV EXTENSION, SADASHIVANAGAR, BANGALORE 560 080. PAN : AADCP 0423C APPELLANT RESPONDENT APPELLANT BY : DR. P.K. SRIHARI, ADDL. CIT(DR) RESPONDENT BY : SHRI RAVISH RAO, CA DATE OF HEARING : 07.09.2015 DATE OF PRONOUNCEMENT : 11.09.2015 O R D E R PER ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 28.3.2014 OF THE CIT(APPEALS)-III, BANGALORE FOR TH E ASSESSMENT YEAR 2007-08. ITA NO.816/BANG/2014 PAGE 2 OF 6 2. THE ASSESSEE FILED NIL RETURN FOR THE A.Y. 2007- 08. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PRODUCTION OF AGRICULTUR AL GOODS. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S. 143 (3) OF THE INCOME-TAX ACT, 1961 [THE ACT] AND IN DOING SO, HE ADDED :- . RS . INCOME FROM AGRICULTURE ASSESSED AS INCOME FROM OTHER SOURCES : 1,11,08,041 UNEXPLAINED LIABILITIES : 1,30,59,664 --------------- 2,41,66,705 --------------- 3. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(APPEALS). GROUNDS NO.2 TO 9 BEFORE THE CIT(A) WERE AGAINST TH E ACTION OF THE AO IN TREATING THE AMOUNT OF AGRICULTURAL INCOME AS INCOM E FROM OTHER SOURCES. 4. THE CIT(APPEALS) OBSERVED THAT THE ISSUE IS COVE RED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL DATED 7.9.201 2 IN ITS OWN CASE IN ITA NO.675/BANG/2011 FOR THE A.Y. 2006-07 AND EXTRACTED THE RELEVANT PORTION OF THE ORDER AS BELOW:- WE HAVE HEARD BOTH PARTIES AND CAREFULLY PERUSED AND CONSIDERED THE MATERIAL ON RECORD INCLUDING THE JUD ICIAL PRONOUNCEMENTS RELIED ON BY THE ASSESSEE AND THE AU THORITIES BELOW. IT APPEARS FROM THE ORDER OF THE ASSESSMENT THAT THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE OWNED LAND WHEN IN FACT, AS POINTED OUT BY THE LEARNED CIT(A), THE ASSESSEE DID NOT OWN ANY LAND, BUT RATHER HAD LEASED 20 ACRE S OF LAND FROM ONE OF ITS DIRECTORS TO CARRY OUT AGRICULTURAL OPER ATIONS THEREON. IT IS ALSO SEEN THAT THE LEARNED CIT(A) NOTED THAT CON CERNED VILLAGE AUTHORITIES HAD GRANTED PERMISSION TO THE ASSESSEE TO CARRY OUT AGRICULTURAL ACTIVITIES IN THE SAID LAND. FURTHER, WE ALSO FIND THAT ITA NO.816/BANG/2014 PAGE 3 OF 6 THE LEARNED CIT(A) HAD EXAMINED OF THE ASSESSEE'S B OOKS OF ACCOUNT FOR THE FINANCIAL YEAR 2005-06 AND CONFIRME D THE FACT THAT THE ASSESSEE HAD CARRIED OUT ONLY AGRICULTURAL ACTI VITIES ON THE LAND IN THE RELEVANT PERIOD, GROWING THEREON RED, Y ELLOW AND GREEN CAPSICUM, CULINARY HERBS, ETC., WHICH WERE BO TH SOLD IN THE DOMESTIC MARKET AND EXPORTED TO THE NETHERLANDS. WE ALSO FIND THAT THE LEARNED CIT(A) HAS RECORDED THAT THE ASSES SEE HAS FURNISHED PROPER EVIDENCE IN RESPECT OF PURCHASE OF MATERIAL FOR GREEN HOUSE, AGRICULTURAL EQUIPMENT, SEEDS, WAGES A S WELL AS EVIDENCE FOR SALE OF FINAL AGRICULTURAL PRODUCTION TO VARIOUS ENTITIES WHICH ESTABLISHES IT THAT THE ASSESSEE HAS RECEIVED AGRICULTURAL INCOME FROM AGRICULTURAL OPERATION CAR RIED OUT DURING THE RELEVANT PERIOD. ALL THESE FACTS NARRATED ABOVE GO TO ESTABLISH THAT THE ASSESSEE HAD ONLY CARRIED OUT AGRICULTURAL ACTIVITIES DURING THE RELEVANT PERIOD AND EARNED AGRICULTURAL INCOME THEREFROM. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED O PINION THAT THE FACTS OF THE CASE AND THE FINDING OF THE CO-ORDINAT E BENCH OF THE BANGALORE TRIBUNAL IN THE CASE OF ADVANTA INDIA LTD . [2010] 5 ITR (TRIB) 57 (BANG) ARE SQUARELY APPLICABLE TO THE CASE ON HAND. IN THE CASE OF ADVANTA INDIA LTD., IT WAS HELD THAT 'THE IMMEDIATE SOURCE OF THE INCOME IS AGRICULTURAL OPERATION COND UCTED BY THE ASSESSEE ON THE LAND AND LAND ALONE AND CONSEQUENTL Y THE SAME IS LIABLE TO BE TREATED ONLY AS AGRICULTURAL INCOME'. THIS IS AN ESTABLISHED FACT IN THE INSTANT CASE OF THE ASSESSE E ALSO. WE AGREE WITH THE VIEW OF THE LEARNED CIT(A) THAT THE ASSESS ING OFFICER'S CONTENTION THAT THE ASSESSEE CANNOT OWN AGRICULTURA L LAND, AS PER THE KARNATAKA LAND REFORMS ACT, 1961, HAS NO RELEVA NCE TO THE ISSUE ON HAND. TAKING INTO CONSIDERATION THE FACTS OF THE CASE AS DISCUSSED ABOVE AND RESPECTFULLY FOLLOWING THE DECI SION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ADVAN TA INDIA LTD., WE CONCUR WITH THE VIEW OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) THAT THE INCOME DERIVED BY THE ASSESS EE IN THE RELEVANT PERIOD, VIZ., ASSESSMENT YEAR 2006-07 IS ' AGRICULTURAL INCOME' AND NOT 'INCOME FROM OTHER SOURCES' AS WAS HELD IN THE ORDER OF ASSESSMENT. 5. FOLLOWING THE ORDER OF THE TRIBUNAL CITED SUPRA, THE LD. CIT(APPEALS) DIRECTED THE AO TO TREAT THE INCOME ASSESSED AS IN COME FROM OTHER SOURCES OF RS.1,11,08,041, AS AGRICULTURAL INCOME. ITA NO.816/BANG/2014 PAGE 4 OF 6 6. AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE LEARNED CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN LAW IN FOLLOWING THE ORDER OF ITAT IN THE CASE OF ASSESSEE FOR AY 2006-07 WHEREIN THE ITAT DI SMISSED THE APPEAL OF THE REVENUE BY RELYING ON ITS OWN DECISIO N IN THE CASE OF M/S ADVANTA INDIA LTD VS DCIT (2010) 5 ITR (TRIB ) 57 (BANGALORE), WHEREIN THE ITAT HAD RELIED UPON ITS O WN DECISION IN THE CASE OF M/S NAMDHARI SEEDS PVT. LTD AND THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF M/S NAMDHARI SEED S PVT. LTD, VIDE ORDER DATED 24.10.2011 HAS REVERSED THE DECISI ON OF ITAT AND HELD THAT THE INCOME FROM CONTRACT FARMING IS B USINESS INCOME RATHER THAN AGRICULTURAL INCOME. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN LAW IN ALLOWING RELIEF TO T HE ASSESSEE BY PLACING RELIANCE ON THE ORDER OF THE ORDER OF ITAT IN THE CASE OF ASSESSEE WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTM ENT IN PRINCIPLE AND A MISCELLANEOUS PETITION HAS BEEN FIL ED BY THE DEPARTMENT. MOREOVER, THE ASSESSEE HAS NOT MADE ANY ATTEMPTS TO PROVE THAT IT HAS PERFORMED ANY AGRICULTURAL ACTIVI TIES TO SUPPORT ITS CLAIM OF AGRICULTURAL INCOME. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN LAW IN DIRECTING THE AO TO ALLOW THE LIABILITIES EVEN WHEN THE ASSESSEE COMPANY IS NOT E NTITLED TO HOLD ANY AGRICULTURAL LAND AND DO CULTIVATION ON IT WITH OUT PROPER NOTIFICATION BY THE STATE GOVERNMENT AS PER THE LAN D REFORMS ACT AND THE CLAIM OF LOAN TAKEN BY THE ASSESSEE FOR AGRICULTURAL PURPOSES IS NOT TENABLE. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT( A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND TH AT OF THE ASSESSING OFFICER MAY BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND / OR DELETE ANY OF THE GROUNDS ABOVE. ITA NO.816/BANG/2014 PAGE 5 OF 6 7. THE LD. DR RELIED ON THE DECISION OF HONBLE HIG H COURT OF KARNATAKA IN THE CASE OF M/S. NAMDHARI SEEDS PVT. LTD. VIDE ORDER DATED 24.1 0.2011. THE LD. COUNSEL FOR THE ASSESSEE PRODUCED A CHART D ISTINGUISHING THE CASE OF M/S. NAMDHARI SEEDS PVT. LTD. RELIED UPON BY THE LD. DR, WHICH IS REPRODUCED BELOW:- 8. WE HAVE HEARD BOTH THE PARTIES. THE BANGALORE B ENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2006-07, REPORTED IN 19 ITR (TRIB) 194 (BANGALORE) , HAS HELD AS FOLLOWS:- ITA NO.816/BANG/2014 PAGE 6 OF 6 HELD, THAT THE ASSESSEE HAD FURNISHED PROPER EVIDE NCE IN RESPECT OF PURCHASE OF MATERIALS FOR GREEN HOUSE, AGRICULTU RAL EQUIPMENT, SEEDS, WAGES AS WELL AS EVIDENCE FOR SALE OF FINAL AGRICULTURAL PRODUCE TO VARIOUS ENTITIES, WHICH WERE ESTABLISHED . THE ASSESSEE HAD CARRIED OUT AGRICULTURAL ACTIVITIES DURING THE RELEVANT PERIOD AND EARNED AGRICULTURAL INCOME THEREFROM. THEREFORE , INCOME DERIVED BY THE ASSESSEE WAS AGRICULTURAL INCOME AND NOT INCOME FROM OTHER SOURCES 9. WE FIND THAT THE FACTS OF THE CASE ARE IDENTICAL TO THAT OF THE EARLIER YEAR DECIDED BY THE TRIBUNAL. RESPECTFULLY FOLLOWI NG THE DECISION OF THE COORDINATE BENCH, WE DISMISS THE REVENUES APPEAL. 10. IN THE RESULT, THE APPEAL BY THE REVENUE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF SEPTEMBER, 2015. SD/- SD/- ( ABRAHAM P. GEORGE ) (ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL M EMBER BANGALORE, DATED, THE 11 TH SEPTEMBER, 2015. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.