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2018 (11) TMI 267 - ITAT PUNEAllowability of exemption u/s.10(1) in respect of the claim of agricultural income - agricultural activity - assessee claims to be engaged in production of specialized seeds in the leased lands, (1)making of certified seeds; (2) undertaking other processing activities and finally (3) trading of the said certified seeds. Assessee also engaged in the trading activity of the said seeds too - Held that:- On the facts of assessee entering into an agreement with the agricultural landlords-cum-growers for growing the foundation and breeder seeds as per the terms and conditions and also the scientific specifications provided by the assessee, when the assessee bears all the expenditure on land development, irrigation, fertilizers, pesticides, transportation etc., when the assessee pays the land rent and also for the labour, when the landlord acts only as a grower and hands over the entire agricultural produce of foundation and breeder seeds to the assessee at the end. Grower never sold the agricultural produce to the assessee etc. Thus, the activity constitutes agricultural activity as the assessee constitutes an agriculturist and the entire activity of production and growing of said seeds becomes an agricultural activity. The solitary evidence gathered by the AO in the solitary case of Shri Bhuma Bala Narasimha Reddy does not hold good considering the fact that the said evidences was not put to the assessee in a settled perspective of legal proceedings. Therefore, procurement of seeds from the landlords-cum-growers is not the transaction of purchase of seeds for trading activity. Thus the claim made by the assessee is proper. The decision of CIT(A) is fair and reasonable and does not call for any interference. - Decided in favour of assessee. Disallowance u/s.14A r.w. Rule 8D(2) - Held that:- It is a settled issue that the said provisions are not applicable when the exempt income is not includes in the total income of the assessee. Accordingly, relevant grounds in the assessment years under consideration are required to be allowed in favour of the assessee.
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