TMI Blog2007 (2) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... ax (Appeals) who held that the sale proceeds of the plants raised in the nursery on the land constituted the income from agriculture ?" 2. The brief facts of the case are that the respondent-assessee is a private limited company which was incorporated on November 20, 1986, and the first return of income was filed for the assessment year 1988-89 for the period from November 20, 1986, to October 31, 1987. The assessment in question is in respect of the previous year November 1 1987, to March 31, 1989 being transitional year of 17 months. The Assessing Officer noticed that the assessee-company was carrying on the activities of running of nursery and of extension service and deriving income therefrom. The assessee purchased plants in its n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther that the profit and loss account for nursery revealed all elements of business like advertisement, salary, discount and depreciation. Hence, income from nursery was treated as business income and profits computed by the Assessing Officer. The assessee has also further shown loss from extension service of Rs. 2,29,947 the period of five months ending with March 31, 1989 and Rs. 3,48,146 the period of 12 months ending with October 31, 1988. The accounts of extension service were in respect of the ETPs sold and the extension charges Rs. 1,10,343 for five months and Rs. 1,66,432 for 12 months have been received from the farmers stated to have been approved by the rural bank. The loss/income under the head "Extension service" was shown by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) directed the Assessing Officer not to tax the income from nursery as it is agricultural income and the income from extension services to be recomputed treating it as business income. 4. Feeling aggrieved by the aforesaid judgment and order of the Commissioner of Income-tax (Appeals) the Revenue Department preferred an appeal before the Income-tax Appellate Tribunal. The cross-appeals were also filed by the assessee. The Income-tax Appellate Tribunal consolidated the appeals together and decided the matter by the common judgment. The Income-tax Appellate Tribunal dismissed both the appeals, i.e., filed by the Revenue Department as well as by the assessee. 5. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. It is important to mention here that the same definition of "agricultural income" has been adopted in section 2(1A) of the Income-tax Act, 1961. 9. From a perusal of both clauses (a) and (b) of the definition of the "agricultural income", it is clear that the income must be derived from land which is used for agricultural purposes. The meaning of the expression an "agricultural purposes" was explained in Raja Mustafa Au Khan v. CIT [ 1948]16 ITR 330 (PC), wherein it has been held that (head note) "Though it must always be difficult to draw the line yet unless there is some measure of cultivation of the land, some expenditure of skill and labour upon it, it cannot be said to be used for agricultural purposes, within the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld and cultivate, cultivation of field which of course implies expenditure of human skill and labor upon land. Turning to the dictionary meaning of "agriculture" Webster's New International Dictionary describing it as the art or science of cultivating the ground, including rearing and management of livestock husbandry farming, etc., and also including in its good sense farming, horticulture, forestry, butter and cheese making, etc. Murray's Oxford Dictionary describes it as the science and art of cultivating the soil, including the allied pursuits of gathering in the crop and rearing livestock, tillage, husbandry farming in the widest sense. In Bouviers' Law Dictionary quoting the Standard Dictionary agriculture is defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. In 57 and 58 Vict C 30 section 22, the term "agricultural property" was defined so as to include agricultural land, pasture, and woodland, etc. 13. The hon'ble Supreme Court in a case CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC) ; AIR 1957 SC 768, has held that " the term 'agriculture' cannot be confined merely to the production of grain and food products for human beings and beasts but, must be understood as comprising all the products of the land which have some utility either for consumption or for trade and commerce and would also include forest product such as timber, sal and piyasal trees casuarina plantations tendu leaves horranuts, etc" 14. Therefore, on the facts of the case, as well as on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
