RAZAK ROWTHER MOHAMED SALEEM,DINDIGUL V. ITO, WARD-1, DINDIGUL

ITA 1731/CHNY/2025

AI Insights

The case revolves around the dispute concerning the classification of income derived from the sale of eucalyptus trees as agricultural income by the assessee, Razak Rowther Mohamed Saleem, for the assessment year 2016-17. The Income Tax Officer initially disallowed the claim, which was upheld by the Commissioner of Income Tax (Appeals). The Tribunal examined whether the activities conducted on the land constituted agricultural activities and whether the income derived from such activities could be classified as agricultural income under the Income Tax Act. The Tribunal found that the assessee had indeed engaged in agricultural activities and that the income from the sale of the trees was rightly claimed as agricultural income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779789 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 16-06-2025
• Other Referred Cases: CIT Vs. Raja Benoy Kumar Sahas Roy, CIT V Ramakrishna Deo, CIT v. Green Gold Tree Farms Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOUTHAMI MANIVASAGAM
• Assessee Lawyers: S. VIDYA
• Keywords: Onus to prove

Judgement Text

"आयकर अपीलीय अिधकरण, ’बी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी एस.आर. रगुनाथॎ, लेखा सद˟ क े समƗ Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri S.R. Raghunatha, Accountant Member आयकर अपील सं./I.T.A. No.1731/Chny/2025 िनधाŊरण वषŊ/Assessment Year: 2016-17 Razak Rowther Mohamed Saleem, No. 29A, Manthinapalli Vasal Street, Batlagundu Road, Begampur, Dindigul 624 002. [PAN:ACFPM9762L] Vs. The Income Tax Officer, Ward 1, Dindigul. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Ms. S. Vidya, C.A. ŮȑथŎ की ओर से/Respondent by : Ms. Gouthami Manivasagam, JCIT सुनवाई की तारीख/ Date of hearing : 10.09.2025 घोषणा की तारीख /Date of Pronouncement : 17.10.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 15.05.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2016-17. 2. The assessee raised 3 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is Printed from counselvise.com I.T.A. No.1731/Chny/25 2 justified in confirming the disallowance of agricultural income in the facts and circumstances of the case. 3. We note that the assessee filed his return of income for the AY 2016-17 on 17.10.2016 admitting total income of ₹.7,65,160/- and agricultural income of ₹.85,84,619/-. The return of income was processed under section 143(1) of the Income Tax Act, 1961[“Act” in short]. The case was subsequently selected for \"Limited scrutiny\" under CASS and notice under section 143(2) of the Act dated 05.07.2017 was issued. The reason for scrutiny selection is to verify the \"Whether sales turnover/receipts has been correctly offered for tax, Whether the claim of agricultural income is correct and Whether the capital gain/loss on sale of property has been correctly shown in the return of income\". We note that after considering the submissions of the assessee, the Assessing Officer observed that the assessee though, planted the tree sapling and carried out pruning activity, all other activities as discussed at page 6 to 10 of the assessment order held that the assessee has not carry out agricultural activities in line with the observations of the Hon’ble Supreme Court in the case of CIT Vs. Raja Benoy Kumar Sahas Roy, and in the case of CIT V Printed from counselvise.com I.T.A. No.1731/Chny/25 3 Ramakrishna Deo, disallowed the agricultural income claimed by the assessee, which was confirmed by the ld. CIT(A). 4. The ld. AR Ms. S. Vidya, C.A. submits that during the course of assessment proceedings and the appellate proceedings, the fact that the assessee had grown Kungiliyam (Eucalyptus) trees and Seegai (Wattle) trees on his land is not disputed. The assessee offered the agricultural income out of sale of trees as defined in the above provisions, for the purpose of claiming agricultural income. The assessee produced the patta and chitta of the lands during the assessment proceedings showing that the land is Punjai lands/ dry agricultural land, which is evident from the assessment order. She submits that it is an undisputed fact by the Inspector of the ward, who did the field visit and submitted the report on 06.12.2018 stating that the assessee was growing eucalyptus trees on his land but only observation made that no maintenance carried out for growth of the trees. She argued vehemently that it is evident that the land on which the eucalyptus trees are grown are dry agricultural lands and drew our attention to the provisions of section 2(1A) of the Act and submits that the agricultural income means any rent or revenue derived from the land which is situated in India and is used for carrying out agricultural Printed from counselvise.com I.T.A. No.1731/Chny/25 4 activities and prayed that the agricultural income claimed by the assessee should be allowed. 5. The ld. DR Ms. Gauthami Manivasagam, JCIT submits that the onus to prove that income qualifies as \"agricultural income\" under Section 2(1A) lies squarely on the assessee, as it is a claim for exemption from tax. The assessee has miserably failed to discharge this burden. She further submits that mere possession of agricultural land (evidenced by patta/chitta/adangal) or permissions for tree felling does not ipso facto establish agricultural income. The assessee must demonstrate actual expenditure of human skill and labour on the land, both in basic operations (e.g., tilling, planting) and subsequent operations (e.g., weeding, manuring, pesticiding, irrigation). The ld. DR argued that the assessee provided no bills, vouchers, labour records, or accounts for expenses on fertilizers, pesticides, irrigation, or maintenance. No such expenses were debited in the books or claimed in the return, which is indicative of no active agricultural involvement. The assessee's contention that labourers took leaves instead of wages lacks any corroborative evidence, such as affidavits or confirmations from labourers. She submits that the Inspector's field report, based on on-site verification & enquiries with local authorities, and conclusively Printed from counselvise.com I.T.A. No.1731/Chny/25 5 establishes spontaneous growth post-initial planting, reliant on natural rain, with minimal human intervention limited to occasional pruning. This report remains uncontroverted by the assessee. The ld. DR vehemently argued that the provisions of section 2(1A)(b) of the Act requires income to be derived from land by \"agriculture,\" which implies integrated activities involving human effort on the land and mere spontaneous growth or minimal intervention does not suffice. By relying upon the decisions of the Hon’ble Supreme Court in the case of CIT v. Raja benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC), CIT v. Raja Ramkrishna Deo [1960] 38 ITR 671 (SC) and in the case of CIT v. Green Gold Tree Farms Pvt. Ltd. [2008] 303 ITR 113 (P&H), the ld. DR prayed to sustain the order confirmed by the ld. CIT(A). 6. We have heard both the parties and perused the material available on record. We note that the assessee has claimed agricultural income of ₹.85,84,619/- as exempt. In support of his claim, the assessee furnished patta and chitta of the land. In order to verify the claim of the assessee, the Assessing Officer deputed the Inspector of the ward, who did the field visit and submitted the field report stating that the assessee was growing eucalyptus trees on his land and also stated that no maintenance carried out for growth of the trees. We note Printed from counselvise.com I.T.A. No.1731/Chny/25 6 that in response to pre-assessment notice, the assessee offered a detailed explanation and extracted from page 4 to 10 of the assessment order. However, the Assessing Officer disallowed the claim of agricultural income only for the reason that no evidence for carrying out agricultural activities along with proof nor any expenses filed. 7. Before us, the ld. AR drew our attention to the provisions of section 2(1A) of the Act, wherein, the agricultural income is defined as follows: \"agricultural income\" means (a) any rent or revenue derived from land which is situated 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 rent-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 taken to market; or (iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii) of this sub-clause; (c) any income derived from any building owned and occupied 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 process mentioned in paragraphs (ii) and (iii) of sub-clause (b) is carried on\" Printed from counselvise.com I.T.A. No.1731/Chny/25 7 8. From the above definition, it is evident that, agricultural income includes revenue from agricultural land and building, and income from agricultural activities and can be broadly classify the same into three categories,(i) rent or revenue earned from agricultural land situated in India, (ii) income from agricultural land arising from primary agricultural activities and the sale of agricultural produce and (iii) income from building required for agricultural operations. Therefore, we find definition of agricultural income is also includes any rent or revenue derived from the land used for agricultural purposes. Admittedly, the land in question was used for agricultural purposes the details of which given by the assessee to the Assessing Officer are reproduced in page 4 to 10 of the assessment order. On perusal of the above, we note that the assessee involved all the agricultural activities in the cultivation of Eucalyptus trees, which are required satisfying the conditions laid down in the provisions under section 2(1A) of the Act. Further, we note that the assessee engaged in many activities for the cultivation includes growth habit, fertilizers, planting techniques, block & row planting irrigation, etc., for growth of Eucalyptus trees. Therefore, we do not find force in the arguments of the ld. DR in stating that the assessee miserably failed to discharge the burden to prove the Printed from counselvise.com I.T.A. No.1731/Chny/25 8 involvement of agricultural activities in claiming as agricultural income as exempt. Further we find that the assessee also involved in basic operations, subsequent operations, processing the product to make it market ready and sale of said agricultural produce. We find the Assessing Officer deputed one of his Inspectors for field report, wherein, it is not disputed that there is no agricultural produce, but, however, disputed there was no agricultural activities in the said land, therefore, in our opinion, the findings of the Assessing Officer that no agricultural income can be claimed without agricultural activities carried out, which was reiterated by the ld. DR, is not justified. 9. It is an admitted fact that during the course of assessment proceedings, the assessee furnished complete details about the impugned land is an agricultural land grown Kungiliyam (Eucalyptus) trees and Seegai (Wattle) trees and any income derived from the land by way of revenue is an agricultural income. The assessee had grown eucalyptus trees on the said land, the same was cut and sold pursuant to the order of the local District Collector and the proceeds from the same was treated as agricultural income, in our opinion, the conditions laid down in the provisions u/sec 2(1A) of the Act, are satisfied. It can safely be concluded that the income from the sale of eucalyptus trees Printed from counselvise.com I.T.A. No.1731/Chny/25 9 that is grown on the dry agricultural land of the assessee is an agricultural income. Accordingly, the order of the ld. CIT(A) is not justified in confirming the order of the Assessing Officer in denying the claim of agricultural income, consequently, the addition made thereon on account of income from other sources is deleted. Thus, the ground raised by the assessee is allowed. 10. In the result, the appeal filed by the assessee is allowed. Order pronounced on 17th October, 2025 at Chennai. Sd/- Sd/- (S.R. RAGHUNATHA) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 17.10.2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. Printed from counselvise.com "