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2012 (9) TMI 577 - ITAT, BANGALOREExemption u/s 10 of agricultural income - contract farming - Assessee produce basic seeds in its own lands and hybrid seeds on the lands leased by it – AO’s objection are that the germplasm is generated out of scientific research and, therefore, it is not agricultural activity – Held that:- Simply because the basic seeds are not fit for human consumption, it cannot be said that the produce is not agricultural produce. The assessee procures germplasm and sows in its own field, and carries on all agricultural operations and produces the basic seeds. The Basic Seeds so harvested are again put through agricultural operations intimately connected with leasehold land for finally bringing out the Hybrid Seeds. Only for the reason that the Basic Seeds are sown in leasehold land and the manpower required are arranged through contract farming, it does not mean that the operations carried out by the assessee are not agricultural operations. Assessee has carried out basic as well as secondary agricultural operations. Therefore, entire such income of the assessee is agricultural in nature. Appeal decides in favour of assessee Depreciation on technical know-how fees – Held that:- As the Tribunal for the previous assessment year has directed the AO to consider the alternate plea of the assessee for allowance of depreciation on technical know-how fees, if claim is in accordance with law. Subsequently, the depreciation on technical-know-how fees treated as capital expenditure has been allowed. Therefore, depreciation on technical-know-how fees should be treated as capital expenditure and depreciation allowed. Case remand back to AO
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