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2021 (1) TMI 1082 - AT - Income TaxAgricultural income - Nature of land - income earned on leasing out agricultural land is agricultural income or not? - HELD THAT:- The undisputed facts of the case are that the assessee is the owner of agricultural land of 20 acres and 10 guntas. The Khasra Pahani also shows that these lands are agricultural lands and that the crop grown thereon is Mango. Therefore, these lands being agricultural land is not in dispute. In addition to these lands, the assessee has taken on lease agricultural lands in Ranga Reddy and Nalgonda Districts from two other persons. These lands also being agricultural lands is not in dispute Whether the agricultural operations have been carried on by the assessee in these lands? - As regards the agricultural operations carried on by Adisa Agro (P) Ltd during the relevant period is concerned, there is no information available on record nor is there any dispute raised by the authorities below, except for a finding by the CIT (A) that there is no evidence on record to state that the company had actually utilized the land wholly and exclusively for the purpose of cultivating on its own rather than sub-leasing it to outside parties. Therefore, no presumption can be drawn about the agricultural operations being or not being carried out by the company. Fact remains that assessee has earned lease rent income by leasing out the agricultural land. Whether such income is eligible to be taken as agricultural income is the question before the Tribunal. The term agricultural income has been defined u/s 2(1A) of the I.T Act and for the purpose of ready reference. From the lease deed, it is seen that the assessee had carried on agricultural operations during the previous year i.e. 2013-14 relevant to the A.Y 2014-15 and thereafter, the assessee has leased out this land to Adisa Agro (P) Ltd on 30.09.2013 i.e. during the previous year 2014-15 relevant to the A.Y 2015-16. Therefore, the assessee had carried on agricultural operations during the previous year 2013-14 and subsequently such agricultural land has been given on lease to a company which is also engaged in carrying on agricultural operations. The finding of the CIT (A) is that the crops grown are commercial in nature. The definition of ‘Agricultural Income’ does not limit its application to any particular crops/produce. The only requirement is that the basic agricultural operations are to be carried out. The nature of the crop being commercial in nature will not therefore, disentitle the assessee from claiming the income as ‘agricultural income’. Thus, the finding of the CIT (A) that the assessee’s intention of taking the agricultural lands on lease is to exploit them commercially is not sustainable to disentitle the assessee from making the claim of agricultural income. Having gone through the decisions relied by the learned CIT (A), that they are all are distinguishable from the facts of the case before the Tribunal and therefore, are not applicable. We set aside the order of the AO and direct him to treat the lease rent received by the assessee from ‘Adisa Agro (P) Ltd’ for use of the agricultural land as agricultural income. - Decided in favour of assessee.
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