TMI Blog2021 (4) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... ting. We find that it is an assumption of the AO to come to the above conclusion without any material. AO further came to the conclusion that the yielding from the assessee s mango garden cannot be more than 90 tons as against 168.3 tons, based on the report of the District Collector, Thiruvallur. This fact is examined by the Ld. CIT(A) at length and he gave a finding that the yielding of the mangoes depend upon the soil, maintenance, variety of mangoes and other aspects and the report of the District Collector is not a conclusive proof. We are fully agreeing with the Ld. CIT(A) on this count. We are also of the opinion that the report of the District Collect, Thiruvallur is not a conclusive proof. The Ld. CIT(A) has considered all the facts and came to the conclusion that the activity carried by the assessee is an agricultural activity and directed the AO to delete the addition. We find no reason to interfere with the order passed by the Ld. CIT(A). - Decided against revenue. - ITA Nos.1062, 1063, 1064, 1065, 1066 & 1067/Chny/2018 - - - Dated:- 10-3-2021 - Shri V. Durga Rao, Judicial Member And Shri G. Manjunatha, Accountant Member For the Appellant : Shri G. Chandraba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the entire activity of the assessee has to be treated as an agriculture activity and sale proceeds received from export of the mangoes has to be treated as an agricultural income. It is also submitted before the Ld. CIT(A) that the AO without establishing the facts simply is having a doubt that the assessee may be purchasing some of the mangoes from the local market and estimated the agricultural income which is not correct. He also submitted the report given by the District Collector, Thiruvallur based on the National Horticulture Board, the AO came to the conclusion that the 15 acres of mango garden can produce only 90 tons of mangoes as against actual production of the mangoes by the assessee is 168.3 tons. The above observation made by the AO without there being any basis, the mango production is based on the soil, weather and variety of mango, depending upon all these facts, mango yielding varies from place to place even within district itself. Therefore, the report given by the District Collector, Thiruvallur based on the National Horticulture Board cannot be a conclusive proof and he has submitted that the entire sale proceeds has to be treated as agricultural income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y till he sells his produce remains agricultural activity. 6.8 For example, if the farmer uses his mangoes for the production of mango pulp or mango juice and markets such pulp or juice, it is not an agricultural activity, because the product produced in the / farm (mangoes) gets changed to a different product (pulp or juice), and the income attributable for such conversion is non-agricultural income and liable for tax. 6.9 In the appellant s case what is produced by the appellant is mango fruits. The appellant has not subjected the fruits to any manufacturing or processing activity. The appellant instead of selling the fruit in the local market exported the mangoes to a different country and sold the same. The mango fruits produced by the appellant is sold in the same form. Hence, this sale price represents the sale of agricultural produce, which in turn constitutes agricultural income under the Income Tax Act. The place and price at which the produce is sold cannot alter the character of the income, as long as the produce remains an agricultural produce in its original form. 6.10 The AO s contentions that the appellant had been exploring the export marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o garden will be to the extent of 6 tonnes per acre as against 7.5 to 11 tonnes per acre, shown by the appellant in different years. For this purpose, the AO relied on various statistical data published by the governmental agencies etc, wherein the national, state and district average yield were reported at an average of 150kg per tree, which works out to six (6) tons per acre. Hence the AO considered only 90 tonnes as the possible mango yield from 15 acres and disallowed the balance claim. 6.15 The above view of the AO is not correct. As rightly pointed out by the appellant, the average yield always gives a distorted picture. These statistics is the average of all the mango gardens which include gardens of different age groups ranging from two (2) years to seventy (70) years, and also gardens that are scientifically nourished, and gardens that are totally neglected. In the appellant s case, the appellant s garden is a well maintained and scientifically managed garden of prime age of about 20 years. Hence the yield of the appellant is always higher than the average yield. 6.16 In India, in general, mango trees are grown with little or no maintenance. This type of garden g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plant protection, soil replenishment and other cultivation practices etc. Again, it should be noted that there are enough instances, where the farmer with his skills and resources has beaten the climatic and regional considerations dramatically and reaped more than double the average yield consistently. 6.20 Further, the appellant is well educated and has lot of passion for agriculture, especially for horticultural crops. He has been attending lot of seminars/workshops/trainings etc. for updating and improving his knowledge in agriculture. Therefore, the appellant being an enterprising agriculturist and coupled with his good resources and high skill, has made his mango garden a model garden, where the yield is at the peak of their potentiality depending on the variety (Banganapallh! Himampasand). 6.21 In view of the above stated detailed discussions, I am of the considered opinion, that the appellant s yield is not abnormal and very much realistically possible due to his hard work, scientific management and better utilization of the resources. In fact, the appellant s incurring of high farm expenses itself, is an evidence of managing the garden in a better and scientifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, it was only an estimation made for the purpose of availing a higher loan facility from the bank, and the figures in the letter are only presumed and estimated ones, as if such volume of mangoes are to be procured from the open market. 6.24 The above submissions of the appellant seem to be correct. There are no evidences brought on record to show, that the appellant had actually purchased mangoes in any of the years under consideration. Though the appellant in its letter to the bank showed the entire cost as purchases on an estimated basis, in reality, most of the expenditure incurred (or to be incurred) by the appellant is on account of packing material costs, export (transportation) charges and labour (grading and packing charges). These expenses alone constitute about 60-80% of the total costs. The balance represents cost of producing the mangoes by the appellant. 6.25 The AO has not brought on record any concrete or corroborative evidence, to show that the have been purchased from the open market at the price mentioned in the documents submitted to the bank by the appellant since it was only an estimation submitted by the appellant to the bank to obtain a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated as a business income. In the assessment order, the AO has not established that the assessee is purchasing mangoes and exporting. We find that it is an assumption of the AO to come to the above conclusion without any material. The AO further came to the conclusion that the yielding from the assessee s mango garden cannot be more than 90 tons as against 168.3 tons, based on the report of the District Collector, Thiruvallur. This fact is examined by the Ld. CIT(A) at length and he gave a finding that the yielding of the mangoes depend upon the soil, maintenance, variety of mangoes and other aspects and the report of the District Collector is not a conclusive proof. We are fully agreeing with the Ld. CIT(A) on this count. We are also of the opinion that the report of the District Collect, Thiruvallur is not a conclusive proof. The Ld. CIT(A) has considered all the facts and came to the conclusion that the activity carried by the assessee is an agricultural activity and directed the AO to delete the addition. We find no reason to interfere with the order passed by the Ld. CIT(A). 8. In the result, appeal filed by the Revenue in ITA No.1066/Chny/2018 is dismissed. 9. As far as ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
