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2010 (6) TMI 673 - AT - Income TaxAgriculture Income - Computation of total income - production and sale of hybrid seeds - HELD THAT:- Operations carried out by the assessee in the previous year relevant to the assessment year in appeal, we find that the production of basic seeds as well as hybrid seeds are the results of basic agricultural operations carried on by the assessee-company in its own land as well as in leasehold land. The method of contract farming does not take away the character of the basic operations carried out by the assessee-company which are agricultural in nature. The assessee-company procures germplasm and sows it in its own fields, 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 is arranged through contract farming, it does not mean that the operations carried out by the assessee-company are not agricultural operations. As a matter of fact, it is to be seen that the assessee-company has carried out basic as well as secondary agricultural operations. Therefore, without any fear of contradiction, it is possible for us to hold that such entire income of the assessee is agricultural in nature which is to be excluded from the nature of total income. The assessee is successful in its appeal. Exemption of income - HELD THAT:- The reasons pointed out by the assessing authority to deny the claim of exemption made by the assessee-company are that the assessee is following international technology, marketing expertise, integrated scientific and commercial activity, etc. These are all matters strange to the strict code of income-tax. Those premises do not have any role in deciding the nature of income within the framework of the Income-tax Act, 1961. The reasons pointed out by the AO are by and large issues to be decided by the policy makers in the Government. In result, appeal filed by the assessee is allowed.
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