TMI Blog2011 (8) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided in favour of assessee. - ITA Nos. 2850 and 2851/Mds/2004 - - - Dated:- 12-8-2011 - U.B.S. Bedi, Abraham P. George, JJ. N. Prasad and N. Chandirasekar for the Appellant Anirudh Rai, CIT-DR, for the Respondent ORDER U.B.S. Bedi: These two appeals of the assessee are directed against the separate orders passed by the ld. CIT(A) III, Chennai both dated 12.10.2004 relevant to the assessment year 2000-01 and 01-02 respectively. 2. These appeals involve some common issue, were heard together, therefore being disposed of by this single order for the sake of convenience. 3. These appeals were earlier disposed of by consolidated order dated 16.05.2005 by holding that the assessment framed by the Assessing Officer is void ab initio on the ground that notice under section 143(2) was issued beyond the period of 12 months as stipulated in the to section 143(2)(ii) applies to notice issued under section 148 also and the Tribunal also opined that it was not necessary to decide other grounds. 4. The Department took up the matter in appeal before the Hon'ble Jurisdictional High Court under section 260A of the Income Tax Act against the common orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring 49.5 acres being tea estate from M/s. Woodbriar Estate Limited on an annual rent, the Assessing Officer after considering the facts such as income offered for sale of green tea leaves and expenses incurred came to the conclusion that the assessee is not engaged in the basic agricultural activity and is not eligible for exemption as agricultural income. This, according to the assessment order, is based on the Hon'ble Supreme Court's judgment in the case of CIT v. Raja Benoy Kumar Sahas Roy (1957) reported in 32 ITR 466. 7.1 The assessee, in appeal, submitted before the first appellate authority that as regards, agricultural income on sale of green tea leaves is concerned, the provisions of section 2(1A) defines agricultural income, it is clear from the provision that what is crucial to the issue is whether the income is in the nature of agriculture or not. It is also stated by the ld. Counsel for the assessee that judgment of Hon'ble Supreme Court in respect of CIT v. Raja Benoy Kumar Sahas Roy (supra) has not been interpreted properly, wherein the emphasis is on the income, which should be from agricultural operation. 7.2 The ld. CIT(A), while considering the appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort the plea of the assessee, the assessee has furnished various details including profit and loss account for the assessment year 2000-01 in which expenditure on account of cultivation charges, harvesting expenses, general charges, staff and labour welfare expenses to the extent of Rs.16,45,173.31 and profit for the year has been shown as Rs.13,31,913/-. This cultivation expenses also includes infilling wages to the extent of Rs.431.94 has been shown, which amply proves that the assessee has done filling of the site, which gets effected with heavy rain, etc. even if it has not done plantation, but all the activities have been carried out including normal weeding, manuring, fungicide spraying, accaricide spraying, foliar spraying, pruning, boundaries/fencing infilling, loading and transporting chemical weeding and irrigation, store tools and spraying upkeep and plucking, etc. So, this clearly indicates that agricultural operation was done even after the assessee has taken lease the land with tea plant bushes. Therefore, neither the Assessing Officer is right in treating the agricultural income as income from other sources nor the ld. CIT(A) is justified in confirming the orders of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per annum. It is also not in dispute that the rent received from the leasing out agricultural land with bushes of tea plants is offered as agricultural income by the holding company with respect to lease rental. It is also undisputed fact that the assessee sold green tea leaves during both the years and after deducting expenses for respective years, net agricultural income has been shown at Rs.30,08,071/- and Rs.13,07,163/- for the assessment years 2000-01 and 01-02 respectively, which amounts have been treated by the Assessing Officer as income from other sources and the ld. CIT(A) has confirmed the action of the Assessing Officer in this regard for both the years. While considering and deciding the issue in relation to sale of tea manufacture in its factory as well as sale of green tea leaves by the assessee, we find that in the context of Bengal Agricultural Income-Tax Act, 1944, in regard to income from sale of green tea leaves and with reference to section 8(3) - Income-Tax Act, 1961 and Rule 8 of the Income Tax Rules, 1962, in the case titled Union of India and Another v. Belgachi Tea Co. Ltd. and Others reported in 304 ITR 1, the Hon'ble Supreme Court hasw dealt with similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aves was purely income from agricultural product and was not assessable under the 1961 Act .........". 10.1 From the above decision, it emerges that the sale of green tea leaves is agricultural income when there were two activities in this reported case, one that of growing tea leaves, selling the same and the other carrying out business of growing and manufacturing tea, in its tea estate. So, considering both the aspects, the Hon'ble Supreme Court has categorically held that since the assessee directly sold green tea leaves, so it cannot be taken to be incidental to the business and whatever income derived from the sale of green tea leaves was assessable as agricultural income. Though none of the parties before us has cited this Apex Court's decision, yet, it is found to be almost direct on the point. 10.2. Looking into the facts of the present case and the issue before us, we, while following the ratio of the above noted decision, hold that the activity of the assessee in growing tea and sale of green tea leaves is an agricultural activity irrespective of the fact whether it is carried on leased land or self-owned land. Since no part of the expenses as disclosed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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