TMI Blog2006 (9) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... ia by the Director of the Academy in favour of Shri Ramesh Batta, the assessee. The contract was for three years i.e., 1996-97 and 1997-98 and was concluded on 31-12-1997. In terms of this lease the 2nd party i.e., the assessee was given right to collect fruits from May 1995 to December 1997 from the Indira Gandhi Forest Academy Residential Complex. As per the terms of the lease the second party was to deposit 10 per cent of the total tendered amount every year. The assessee was also allowed to make his own arrangements for irrigation i.e., for watering of the trees. First party was also empowered to use the orchard land or any part thereof in which fruit trees were standing for any purpose during the lease period by giving a written notice to the second party i.e., the assessee. 3. The assessee filed his return of income declaring total income at Rs. 4,37,636 and agricultural income at Rs. 4,39,410. The return was initially processed under section 143(1)( a ) of the Act. Later on notices under section 143(2)/142(1) were issued and the assessee was required to justify his claim in respect of agricultural income of Rs. 4,39,410 which included income from garden sale proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port of the contentions that appellant was authorized to use the orchard land for purposes of watering and other operations. ( iii )The reliance was placed on the judgment of Hon ble Supreme Court in CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 at pages 483 to 484. ( iv )Attention was also drawn to the provision of section 2(1A). It was stated that there were three limits given in the definition of "Agricultural income". It was to be rent or revenue, which was to be derived from land which was situated in India. And thirdly, which is used for agricultural purposes. ( v )The judicial decisions and rulings relied upon by the Assessing Officer in his order for assessment year 1996-97 which forms the basis of such finding in the assessment order under appeal were stated not in favour of the Department but they strengthened the claim of the appellant of agricultural income. The case laws cited by the Assessing Officer in the order are : ( a ) CAIT v. Narayanan Taratan Namboodiripad [1967] 64 ITR 57 (Ker.) ( b ) CIT v. R. Krishnarjunan [1997] 225 ITR 510 (Ker.) ( c ) C.P.A. Yoosuf v. ITO [1970] 77 ITR 237 (Ker.) The assessee also placed reliance on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ground of appeal is rejected." 7. The learned counsel for the assessee Shri Sapra has submitted detailed arguments for assailing the findings of the learned CIT(A). He has submitted that the departmental authorities have not been able to appreciate the activities carried out by the assessee for taking income from sale of fruits. According to him, the assessee was required to undertake various activities and operations for taking the yield. It was pointed out by him that for this purpose the orchard land was also handed over and was given in possession of the assessee who was required to carry out the activities of the digging the soil, watering the trees, pruning, cutting, cleaning the bushes and also plucking the fruits. According to him, these activities were in the nature of agricultural activities and since the operations were agricultural operations, the income earned by the assessee on performing such operations is to be treated as agricultural income and not as business income. In support of his contention the learned counsel also placed reliance on various authorities including the following : ( a ) Radhasoami Satsang v. CIT [1992] 193 ITR 321 323 (SC) ( b ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 kilometers, 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, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette. Explanation 1 - For the removal of doubts, it is hereby de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in detail by the Hon ble Supreme Court in the case of CIT v. Raja Binoy Kumar Sahas Roy [1957] 32 ITR 466 wherein it has been held as under : " Agriculture in its primary sense denotes the cultivation of the field and is restricted to cultivation of the land in the strict sense of the term, meaning thereby tilling of the land, sowing of the seeds, planting and similar operations on the land. These are basic operations and require the expenditure of human skill and labour upon the land itself. Those operations which the agriculturist has to resort to and which are absolutely necessary for the purpose of effectively raising produce from the land, operations which are to be performed after the produce sprouts from the land, e.g., weeding, digging the soil around the growth, removal of undesirable undergrowth, and all operations which foster the growth and preservation of the same not only from insects and pests but also from depradation from outside, tending, pruning, cutting, harvesting and rendering the produce fit for the market, would all be agricultural operations when taken in conjunction with the basic operations. The human labour and skill spent in the performa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee the matter has been restored to the file of the learned CIT(A) for deciding the issue afresh because the learned CIT(A) disposed of the appeals ex parte. However, the fact remains that the department has never treated the income derived from fruits as income on account of agricultural operations or as agricultural income. 13. In the instant case the learned CIT(A) has therefore, rightly held the income derived by the assessee as business income. We, therefore, do not find any reason to interfere in the order of the learned CIT(A). It is upheld by us. This ground of appeal taken by the assessee is rejected. 14. The next ground is about sustenance of disallowance of Rs. 12,910 under the head "Depreciation on car". The learned CIT(A) upheld the order of the Assessing Officer by observing as under : "3. In ground No. 2 of the appeal the appellant has objected to the disallowance of depreciation at Rs. 12,910 on account of personal use of car. The appellant had shown hiring of his personal car to the sister concern M/s. Rakesh Brick Unit for 12 months on monthly rent of Rs. 1,250 and had claimed depreciation at Rs. 25,821. The Assessing Officer observed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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