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2023 (4) TMI 1172 - AT - Income TaxExemption u/s 10(1) - Whether research and development activities of the assessee forms integral part of the agricultural activities for the purpose of section 10(1)? - HELD THAT:- There is no dispute about the activities conducted by the assessee or the assessee conducting such activities year after the year. It is also not in dispute that for the earlier assessment year, 2012-13, initially, no such disallowance of claim under section 10(1) of the Act was made, but was made consequent to the order under section 263 of the Act. It is also not in dispute that the order under section 263 as well as the order under section 143(3) read with section 263 of the Act were quashed. It is also not in dispute that the activities conducted by the assessee in this case are similar to the activities of M/s. Nuziveedu Seeds Ltd. [2015 (3) TMI 938 - ITAT HYDERABAD] It does not deny the fact that the activities of the assessee include such operations as are defined as the agricultural operations under section 2(1A) of the Act. Complaint of the learned Assessing Officer is that merely because the assessee is conducting the activities like sowing, weeding, irrigation, inter-cultivation etc., the same cannot be considered as agricultural operations u/s 2(1A) of the Act, because assessee conducts such activities as incidental to the main activity of producing foundation seeds which is a commercial activity in nature. We are unable to agree with this argument advanced on behalf of the Revenue. Hon’ble High Court succinctly said that seed is a product of agricultural activity. When such agricultural activity is conducted and seeds are produced, merely because such seeds were sold commercially, the basic agricultural operations also cannot be dubbed as ‘commercial activities’, and not ‘agricultural activities’. Also see M/S PRABHAT AGRI BIOTECH LIMITED., HYDERABAD [2014 (2) TMI 1197 - ANDHRA PRADESH HIGH COURT] - Decided against revenue.
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