TMI Blog2017 (1) TMI 626X X X X Extracts X X X X X X X X Extracts X X X X ..... ities with reference to the provisions and for the above reasons, we are of the view that the Revenue cannot raise the said issue at this stage. In the light of the concurrent findings of the appellate authority and the appellate Tribunal and also in the light of the above decisions, this Court is not inclined to interfere with the impugned order of the appellate Tribunal. The substantial questions of law are answered against the Revenue - Tax Case Appeal No.617 of 2016 - - - Dated:- 1-9-2016 - MR. S.MANIKUMAR AND MR. D.KRISHNAKUMAR, JJ. For The Appellant : Mr.T.Ravikumar, Senior Standing Counsel for Income Tax Department (Judgment of the Court was delivered by D.KRISHNAKUMAR, J) The present appeal has been filed by the Revenue under Section 260A of the Income Tax Act 1961 against the order of the Income Tax Appellate Tribunal, B Bench, Chennai, in I.T.A. No. 2108/Mds/2015 for the Assessment Year 2004-05. 2. The facts of the case in nutshell are as follows:- The respondent herein is the assessee. The respondent/assessee was a landscaping architect and was running two business concerns, viz., plants scape and flowers and petals. He filed the return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Explanation 3 to Sec.2(1A) was inserted by Finance Act, 2008 with effect from 01.04.2009 and was applicable only from the assessment year 2009-10 onwards and not for the earlier assessment years. However, the Tribunal without considering the same, has dismissed the appeal filed by the Revenue. The Tribunal has also failed to note that the assessee without performing the basic operations like tilling, sowing of seeds, planting etc., on the land but subsequent actions like weeding, digging the soil around the growth, tendering, pruning, cutting etc., would not be sufficient to categorise them as agricultural operations. He would also submit that the Tribunal has wrongly relied on the decision in the case of Commissioner of Income Tax vs. Soundarya Nursery (241 ITR 530). In support of his contention, he relied on the decision rendered by the Allahabad High Court in the case of H.H.Maharaja Vibhuti Narain Singh vs. State of Uttar Pradesh (1966) 34 CCH 0268 ALLHC : (1967) 65 ITR 0364 and the decision of Patna High Court in Commissioner of Wealth Tax vs. Nathmal Jalan (1996) 64 CCH 0635 PatHC : (1997) 142 CTR 0399. Ultimately, in the light of the above facts and decisions, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny document with regard to the expenditure incurred by him towards agricultural operations such as tilling of land, sowing of seeds, plating and similar operation of land. He has also relied on the decision of the Allahabad High Court in the case of H.H.Maharaja Vibhuti Singh vs. State of U.P. (65 ITR 3640) wherein it has been held that income from nursery is not an agricultural income unless maintained by the farmers as an additional or necessary adjunct to the primary process of agriculture for example paddy, nursery, nursery of tomato plants. He has also referred to the decision of the Punjab High Court in the case of CIT Vs. Raja Bahadur Karmakya Narain Singh (161 ITR 325) wherein it has been held that there must be nexus between the income, land and agricultural operation. Eventually, based on the aforesaid decisions, the Assessing Officer disallowed the agricultural income, by order dated 13.03.2013. 10. Against that order, the respondent/assessee filed an appeal before the Commissioner of Income Tax (Appeals), Chennai, challenging the validity of reopening the assessment under Section 147 and disallowance of agricultural income, treating the same as business incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned, we are surprised that, that question should have been raised at all by the Revenue, as it is not possible for the seeds to exist without the mother plants, and the mother plant, it is nobody's case, was not grown on land. It is also not the case of the Revenue that the seeds were the result of the wild growth and not on account of cultivation by the assessee. The seeds were clearly a product of agriculture and the income derived from the sale of seeds, was agricultural income. 12. In the light of the aforesaid decisions, subsequently, the Ministry of Finance has amended Section 2(1A) of the Income Tax Act and thereby, Explanation 3 to Section 2(1A) was inserted by the by Finance Act,2008, to treat the income from nursery as agricultural income and the same is usefully extracted hereunder:- 2(1A) Agriculture income means - ....................................................................... Explanation 3 For the purpose of this clause, any income derived from saplings or seedling grown in a nursery shall be deemed to be agriculture income. This amendment came to force with effect from 01.04.2009 and the same is applicable from the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ja Vibhuti Narain Singh v. State of U.P. ([1967] 65 ITR 364, wherein the Court made an observation which was clearly obiter that agriculture cannot be carried on in pots, as in that case, a large number of coconut plants were nurtured on land in the nursery. 16. In the explanation offered to the Assistant Commissioner of Income Tax, Business Circle II, Nungambakkam, Chennai, the assessee/respondent herein has submitted that he has been doing Landscaping Architect from 1981 and running two business concerns viz., plantscape and Flower and Petals. He is growing plants in his lands and for that purpose, he has incurred expenses for tilling of land, sowing of seeds, and purchase of clay sand and fertilizers. As such, agricultural operations are carried on the land. 17. From the materials on record, it could be seen that, it is not the case of the Assessing Officer, at the first instance that the assessee has not produced any details of the expenditure incurred in raising flowers and petals in pots. Assessment order does not disclose that because of the fact that the assessee did not prove expenditure, income from flowers and petals was added. He has only stated that without pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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