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2015 (11) TMI 632 - AT - Income TaxApplication of provisions of rule 7B of the Income-tax Rules, 1962 - CIT (Appeals) found that the assessee is not marketing any coffee product and the assessee is only an agriculturist observing that the provisions of rule 7B are not applicable - Held that:- If the assessee derives income from sale of coffee grown, cured, roasted and ground with or without mixing chicory or other flavouring ingredients, then 40 per cent. of income shall be treated as from business for the purpose of taxation under the Income-tax Act. The balance 60 per cent. has to be treated as income from business. The Commissioner of Income-tax (Appeals) found that the assessee is not engaged in coffee processing activity and the assessee is only selling the sun dried coffee seeds. In other words, the assessee is selling cured coffee seeds. If the assessee is selling only cured coffee seeds, the provisions of rule 7B(1) would come into operation. Therefore, the Commissioner of Income-tax (Appeals) may not be correct in observing that the provisions of rule 7B are not applicable in case the assessee is selling only the sun dried coffee seeds and not engaged in other processing activity. Therefore, this Tribunal is of the considered opinion that income from coffee estate has to be computed by applying rule 7B of the Income- tax Rules, 1962. Therefore, the order of the Commissioner of Income-tax (Appeals) is set aside and the entire issue is remitted back to the file of the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) shall apply the provisions of rule 7B and thereafter compute the income from coffee estate. Disallowance of expenditure for earning the agricultural income - Held that:- While considering the claim of the assessee for computation of income from coffee estate, this Tribunal remitted back the matter to the file of the Commissioner of Income-tax (Appeals) to compute the income by applying rule 7B of the Income-tax Rules, 1962. Therefore, this issue also needs to be reconsidered by the Commissioner of Income-tax (Appeals). Accordingly, the disallowance is also set aside and remitted back to the file of the Commissioner of Income-tax (Appeals). - Decided in favour of revenue for statistical purposes.
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