TMI Blog2010 (4) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) Whether the Tribunal was right in upholding the reassessment made under section 147 of the Act for the assessment years 1993-94 and 1994-95 ? (2) Whether the Tribunal was right in upholding the validity of reassessment made under section 147 of the Act for the assessment years 1993-94 and 1994-95 when the mandatory notice under section 143(2) had not been issued within the time prescribed ? (3) Whether the Tribunal was right in holding that the income earned by the assessee is not agricultural income but income from business ? (4) Whether the Tribunal was right in not considering the grounds of appeal questioning the validity of the estimate of income under section 44AD for the assessment years 1996-97 and 1997-98 ? 2. These cases relate to the assessment years 1993-94 to 1998-99. The questions are identical. The appellant claims that it is engaged in growing and maintenance of teak farms. The assessee admitted the total income for the relevant years and claimed that it was exempt as agricultural income. As against the returns filed, intimation and reassessment was made under section 147 of the Income-tax Act, 1961. The assessee filed a petition under section 154 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eak planting. It was clearly understood by all the parties that the stipulations of STM would be complied with only by WRF. But the fact is indisputable that the lands were used for agricultural operations ; they were in the assessee's possession and the income was derived therefrom. Therefore section 2(1A) would clearly apply. Learned counsel read out the agreements between the parties. He said that it can- not be denied that maintenance charges and non-utilisation charges would come under agricultural income. He relied on CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC). He also submitted that it was no one's case that the agreements were not genuine. 6. The learned standing counsel appearing for the Department would support the impugned decision. According to him, the nomenclature of the receipt cannot clinch the issue, but only the actual nature of the receipt. 7. The assessee claimed that they "are doing agricultural activities in our own lands and cultivating seasonal and long-term crops like dhal, soya, vegetables, teak etc." The factual finding is that the assessee had not grown long-term or seasonal crops like dhal, soya and vegetables. This is not disputed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is connection with the land, requires as a dwelling house, or as a store-house, or other out- building, and (ii) the land is either assessed to land revenue in India or is subject to a local rate assessed and collected by officers of the Government as such or where the land is not so assessed to land revenue or subject to a local rate it is not situated- (A) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation notified area committee, town area committee, town committee or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or (B) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (A), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette. Explanation 1.-For the removal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that anyone falling within the definition of "person" who receives the income from the land, which income is taxable, what is required is receipt of agricultural income from the land within the State and it is not necessary to hold or own the land". In Mysore Minerals Ltd. v. CIT [1999] 239 ITR 775 (SC) the Supreme Court held that, "anyone in possession of a property in his own title exercising such dominion over the property as would enable others being excluded therefrom and having right to use and occupy the property in his own right would be the owner of building for the purpose of section 32(1), though a formal deed of title may not have been executed and registered, and he would be entitled to depreciation thereon." Learned counsel also relied on a decision of the Income-tax Appellate Tribunal, Chennai B Bench made in I. T. A. Nos. 1147 of 1999 etc. (Premier Farms Pvt. Ltd. v. Deputy CIT) dated December 30, 2003, where with regard to another assessee who had entered into identical agreements with STM, but. had passed on that duty to one Sastha Pharms as in the instant case where the assessee has passed on the duty to WRF, the Tribunal held that non-utilisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the teak plants in the schedule pro perty by employing directly its own servants or through agents (d) To submit periodical reports to STM regarding the growth of teak trees and allow agents/servants of STM to inspect the growth of the teak trees based on such report and/or other wise. (e) To do all other acts, deeds and thngs as directed by STM for the proper growth of teak saplings/trees. 16. From this it is clear that the operations that should be done on the land for STM are really carried out by WRF, which is STM's own sister concern and apart from allowing the land to be used the assessee does nothing, and the income is for allowing the land to be used by STM. The Assessing Officer found that all that the assessee did was to place at the disposal of STM 41.59 acres, for which the above payments were made and that it shifted the entire responsibility under its agreement to WRF. The above tabular column will also substantiate this finding. The Assessing Officer also found that what the assessee did was to provide the lands used by it and lease out some to STM and for that non-utilisation charges were paid. This cannot be treated as income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product. But the enquiry should stop as soon as the effective source is discovered. In the genealogical tree of the interest, land indeed appears in the second degree, but the immediate and effective source is rent, which has suffered the accident of non-payment. And rent is not land within the meaning of the definition." 20. In CIT v. Kunwar Trivikram Narain Singh [1965] 57 ITR 29, the Supreme Court referred to the observations of the Privy Council in the judgment cited above and from the same judgment, quoted the following (page 33) : "'Agricultural income' as defined in the Act is obviously intended to refer to the revenue received by direct association with the land which is used for agricultural purposes and not by indirectly extending it to cases where that revenue or part thereof changes hands either by way of distribution of dividends or otherwise." The Supreme Court held thus (page 34) : 21. "It follows from the decisions of the Privy Council and the judgments of this court that if it is held in this case, that the source of the allowance or pension is the arrangement arrived at in 1837, then the income cannot be held to be derived from land within the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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