TMI Blog2019 (10) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... rived by person who is a cultivator or who is the owner of land. It is only the receiver of rent-in-kind who can directly be held to be the owner of land as referred to in this section. Further that a cultivator may be the owner but it is not necessary that he has to be the owner. In terms of Clause (a) there can be a recipient of rent from land which implies ownership and also a recipient of revenue derived from land, which implies that the person can be the owner or may not be the owner of land. Sub Clause (1) of Clause (b) speaks of income derived from an agricultural land by agricultural activity. Thus revenue derived from land or from agriculture implies a periodic return of income from agricultural operations only It can be well appreciated that the assessee firm though not being the owner of the agricultural land in question is entitled to get exemption of the agricultural income derived from the said land owned by the partners of the firm. The issue is thus decided in the affirmative i.e. in favour of the assessee and against the Revenue. - ITA No. 72/Ahd/2019 - - - Dated:- 30-7-2019 - Shri Waseem Ahmed, Accountant Member And Ms. Madhumita Roy, Judicial M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee as to why the difference of ₹ 39,80,792/- being the difference of ₹ 52,26,355/- and ₹ 12,45,563/- should not be treated as business income and added to the total income of the assessee in view of the particular fact that the assessee firm does not own any agricultural land in its balance sheet. Finally, the assessment order was passed against the assessee by making an addition of ₹ 39,80,792/- on the said ground as discussed above. While doing so, the Learned Assessing Officer made an observation that no agreement between the firm and land owners indicating such activity has been submitted by the assessee firm, neither, the firm was paying any rent to the land owners and hence as per definition of section 2(1A) of the Act, the firm was not entitled to such exempt agricultural income. In appeal, the same was confirmed by the Learned CIT(A). Hence, the appeal before us. 4. At the time of hearing of the instant appeal, the Learned Counsel appearing for the assessee submitted before us that the ownership of land was not a prerequisite for having agricultural income and it would suffice if revenue is derived from agricultural activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereof is as follows: 17. Clause (a) specifically states that agricultural income means any rent or revenue derived from land which is situated in India and is used for agricultural purposes. Similarly, clause (b) speaks about income derived from a land situated in India and which is used for agricultural purposes of agriculture or any other work specified in items (ii) and (iii) of this clause. Clause (c) is not applicable in this case. A plain reading of this section makes it clear that all that is necessary that revenue should be derived from a land situated in India and which is used for agricultural purposes. This section does not specify that revenue has to be derived by the owner of the agricultural land only. Revenue therefore implies some yield or some income from: agricultural operations. Sub-clause (ii) and (iii) also use the terms cultivator and receiver of rent-in-kind . These terms also appear in Clause (c) of section 2(1A). Thus, it can be inferred that agricultural income can also be derived by a person who is a cultivator or who is the owner of land. It is only the receiver of rent-in-kind who can directly be held to be the owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en that land in question was received by it from Maharashtra State Farming Corporation for joint cultivation to grow and produce sugarcane. Assessee also placed on record before authorities below the copy of the agreement executed for joint cultivation with Maharashtra State Farming Corporation. Thus there was no denying the fact that sugarcane was cultivated on the land owned by MSFC Ltd., and also the basic agricultural activity in the form of preparation of land for cultivation, ensuring water supply, plantation of seeds, tending of saplings of sugarcane, spraying of insecticides and pesticides, manuring etc., was carried out in respect of sugarcane by the partners of the firm. It was clear stand of the assessee before the Assessing Officer that since land was owned by MSFC Ltd., it was not reflected in the Balance Sheet. The Assessing Officer was not justified in rejecting this argument. At the same time Assessing Officer has not doubted the cultivation of sugarcane on the agricultural land in question. In this situation, the Assessing Officer was not justified in holding that income of assessee is not income from agriculture. In any case merely because the agricultural activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation of law and on surmises and conjectures. In view of the above, the CIT(A) was justified that amount of ₹ 32,69,820/-and ₹ 35,13,376/- for A.Ys. 2002-03 and 2003-04 respectively are agricultural income of assessee firm. This reasoned factual finding need no interference from our side. As a result, both the appeals filed by the Revenue are dismissed. 22. The Cross Objections filed were in support of the order of the CIT(A) goes academic. In view of the foregoing conclusion wherein the order of the CIT(A) has been upheld. If the ratio of the judgment is applied to the instant case then it can be well appreciated that the assessee firm though not being the owner of the agricultural land in question is entitled to get exemption of the agricultural income derived from the said land owned by the partners of the firm. The issue is thus decided in the affirmative i.e. in favour of the assessee and against the Revenue. Thus with the above observation, we delete the addition made by the authorities below. 6. In the result, assessee s appeal is allowed. This Order pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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