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2011 (2) TMI 241 - HC - Income TaxAddition - Agriculture income - Bogus capital formation through shares - Rule 7 of the Income Tax Rules, 1962 - In the return, the assessee claimed that the income from above two sources was his agricultural income under Section 2(1A) of the Act. The assessing officer, however, disallowed the above claim of the assessee and on observing that the agricultural income claimed by the assessee was covered under Rule 7 of the Income Tax Rules, 1962 and accordingly, calculated the non-agricultural income at Rs. 74,73,041/-, bringing it to the ambit of tax. - Held that: - calculation made by the AO while working out nonagricultural income in the hands of the assessee, find that such addition/disallowance in the hands of the assessee on account of non-agricultural income is not justified, as the conversion of raw seeds into pea seeds cannot be held as non-agricultural merely on the ground that there was a complete change from raw seeds into pea seeds which was not justified keeping in view the fact that the assessee changed such raw seeds into pea seeds, observing that the same was a highly perishable item which would have resulted in prospective loss in absence of marketability for the same. - Decided in favor of assessee. Shares - genuineness of transaction -s per the material on record, in spite of the sale of shares having taken place in the year 1998, the payment thereof was made to the assessee in the next assessment year - no explanation, much less a plausible explanation had been furnished by the assessee as to why the payment was delayed for about one year and three months - Held that: - transaction of purchase and sale of shares of M/s. Rassi Cement Ltd. was not a genuine transaction. - Decided against the assessee.
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