TMI Blog2011 (1) TMI 1516X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon'ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. vs. DCIT 328 ITR 81. The A.O. has to consider the disallowance at a reasonable amount with out resorting to the Rule 8D. Accordingly, the matter is restored to the file of the A.O. to consider the issue of disallowance under section 14A keeping in mind the principles of law as established by the judicial forums and re-determine the reasonable amount as disallowance. 5. The issue in Revenue s appeal is allowance of exemption under section 10(1) on the income of `44,85,20,568/- arising from seeds division treating it as agricultural income. 6. The assessee has claimed income of `45.85,20,568/- arising from Seeds Division to be exempt under section 10(1). On being asked to substantiate its claim the assessee submitted vide letters dated 25.08.2008 and 25.11.2008 that the assessee company grows seeds with the help of farmers under a Seeds Production Agreement. As per the agreement the farmers carry out various agricultural activities under the guidance and supervision of the assessee company. The assessee is entitled to carry out or direct the farmers to carry out agricultural activities considered n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 26.11.2007. The relevant facts are contained in para 4 to 4.1 of the order. We reproduce para nos. 4, 4.1 and 10 to 18 of the order as under:- 4. Briefly stated, the facts are that the assessee company was incorporated in the year 1988 for production of high yielding hybrid seeds. In terms of the approval of the Foreign Investment Promotion Board (FIPB) dated 24.6.84, the company is engaged in the business of production and marketing of hybrid seeds. The company with the help of farmers carries out the production of hybrid seeds. According to the assessee, growing of hybrid seeds involves carrying out agricultural operations jointly with the land owners. The assessee company enters into agreement with the land owners for using their land. The land owners remain the legal owners of the agricultural land and they allow the usage of land exclusively for the growing of hybrid seeds. The farmers (land owners) agreed to assist the assessee company in its agricultural activities under the supervision of company s supervisors. Before selecting farmers who own the agricultural land, the assessee company takes into consideration factors such as quality of land, quality of soil, locatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisputed facts that the assessee has shown agricultural income on the same activity for AY 90-91 onwards. During the assessment proceedings for AY 90-91, the claim of the assessee was negated by the Assessing Officer. The assessee filed appeal before the CIT(A), who after discussing the issue in detail allowed the claim of the assessee of doing agricultural activity and the Assessing Officer was directed to accept the agricultural income shown by the assessee. The assessments for AY 91-92 and 92-93 were passed u/s143(3) and the Assessing Officer has accepted the agricultural income as shown by the assessee himself. However, thereafter the Assessing Officer negated the claim of the assessee by assessing the receipts as business receipts against agricultural receipts shown by the assessee. The assessments for AY 96-97 and 97-98 were reopened u/s 147/148. The assessee filed a letter dated 24.12.2000 requesting the AO to treat the return as return filed in response to notice u/s 148. As discussed above that the Assessing Officer was not satisfied with the explanation that the activity done by the assessee are of agricultural activity as in his view, these are commercial activities, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the receipts shown by these assesses are agricultural receipts. On appeal before the Tribunal, the Tribunal held that the receipts shown by the assessee are agricultural receipts. The Tribunal has discussed the issue in detail. The meaning of agricultural income has also been discussed and by placing reliance on the decision of Madras High Court in the case of Maddi Venkatasubbayya in 20 ITR 151 and in the case of Associated Metal Co in 177 ITR 428(Alld) where the facts were identical decided the issue in favour of the assessee. The decision of the Supreme Court in the case of Raja Benoy Kumar Sahas Roy in 32 ITR 466 was also taken into consideration by the Tribunal. While discussing the ratio of these decisions in detail, the Tribunal came to the conclusion that on entering into an agreement with farmers the receipts shown by the assessee are agricultural receipts. We further noted that the CIT(A), who allowed the appeal in the case of Indo American Exports and Namdhari Seeds Pvt Ltd (supra) has also taken into consideration the decision of the CIT(A) in the case of the assessee. It was noted by the CIT(A) that the facts in the case in hand and the facts in the case of Monsanto ..... X X X X Extracts X X X X X X X X Extracts X X X X
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