STATE Vs. INCOME TAX OFFICER, WARD-4
INCOME TAX APPELLATE TRIBUNAL
Income Tax Officer, Ward -4
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T.R.Sood, Member (A) -
(1.) THESE appeals are directed against the order of the ld. CIT(A), Karnal dated 2.2.2012. In ITA No. 389/Chd./2012, Assessment year 2003 -04 the assessee has raised the following ground:
"Worthy CIT(A) has erred in confirming the addition made by the Assessing Officer at Rs. 2,05,120/ - treating this income from growing of sale of mushroom and not income from agriculture and treated the agricultural income to be income from other sources."
(2.) IN ITA No. 377/Chd./2012, Assessment year 2004 -05 the assessee has raised the following ground:
"Worthy CIT(A) has erred in confirming the addition made by the Assessing Officer at Rs. 2,95,440/ - treating this income from growing of sale of mushroom and not income from agriculture and treated the agricultural income to be income from other sources."
After hearing both the parties we find that the assessee had filed return declaring net taxable income at nil. In Assessment year 2003 -04 in the computation of income the assessee had shown income of Rs. 2,05,120/ - from growing of Mashroom which was claimed as agricultural income and was therefore exempt from tax.
(3.) IT seems the appeal of the assessee was dismissed by the ld. CIT(A), Panchkula and the assessee preferred an appeal before the Tribunal. The Tribunal remanded the issue back to the file of Assessing officer in ITA No. 310/Chd./2008 and relevant para of the order has been extracted by the Assessing Officer in Assessment year 2004 -05 which is as under:
"I have found force in this argument of eh assessee but still to be fair to both the sides, specially when all the details were not furnished during assessment proceedings, it will be fair if the Assessing Officer is directed to examine the details of any furnished by the assessee and then to take decision in accordance with law. Needless to mention here that due opportunity be provided to the assessee. Consequently all these grounds of the assessee are sent to the file of Assessing Officer for fresh adjudication, therefore this appeal of the assessee is allowed for statistical purposes only."
In view of above fresh notice u/s. 143(2) was issued. In response the assessee appeared along with Chartered Accountant and filed following reply:
"The basic material for growing the mushroom includes soil (mitti), wheat straw, husk, gypsum, urea, super potash and can (kissan khad) and molasses, rice husk, sand, gobar, see (wheat) and manual labour. We sow seed in the mixed material and that is kept in polythene bags in the shape of bed also. Then we spray water on all the polythene bags in the shape of bed also. Then we spray water on all the polythene bags. On those bags, we put raakh, mitti and desikhad (made from gobar) which we prepare ourselves. After about 15 days mushroom comes out and after cutting and washing, we sell it fresh in the market.
For growing the mushrooms, he has to look after weeding, removing pests, insects etc. tending, pruning harvesting and rendering the produce to make it marketable. We grow mushrooms from November to February only in natural climatic conditions and no electrical appliances used. The mushroom is an agricultural income and for that your kind attention is drawn towards earlier results accepted by the predecessor officers available at pages 8 to 18 of the paperbook. The particular of declared and accepted agricultural income are as under:
Certificate of Additional Secretary to Government of India available at page 6 and that Director of Horticulture, Haryana available at page 7, further substantiate the above facts. In these facts there ought not be doubt to treat the income from growing and sale from mushrooms as agriculture.
Your kind attention is invited to the law laid down by the Supreme Court reported in : 32 ITR 466 and Hon'ble Andhra Pradesh High Court reported in : 42 ITR 83 and to the judgment of Hon'ble Madras High Court reported in : 24 ITR 531. The Hon'ble Madras High Court have held as under:
All the products of the land which have some utility either for some consumption or for trade or commerce if they are based on land, would be agricultural products. If the plant sold in pots were the result of basic operations on the land expending human skill and labour thereon and if after performance of the basic operations on land the resultant product grown or such part thereof was suitable for being nurtured in a pot with water or by placing them in the greenhouse or in shade or after performing several operations such as weeding, watering, manuring etc. and are made ready for sale, all these operations are agricultural operation and the plants are product of agriculture.
The assessee was carrying on business of a nursery and various types of fruit plants, flower plants, vegetable plants and seedlings on scientific basis, grow plants on prepared beds and after several operations carried out on the land viz. cutting, gootying and inarching they were transplanted in suitable container including pots and kept in the greenhouse in shade and then sold. The assessee claimed that the income derived from the sale of plants in pots."
Further reliance was placed on certain judgments. The Assessing Officer observed that the cases relied on by the assessee are on different facts. He observed that for growing of mushrooms, wooden casing filled with compost is stacked in the rooms under controlled temperature. The activity performed by the assessee is no way in the nature of cultivation and hence not covered within the definition of 'agriculture'.;
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