2014 (12) TMI 1391 - HC - Income Tax

Nature of income - agricultural income or income from other sources - AO had held that the agricultural land owned by the assessee was about 8 acres only and as such the assessee could not have earned huge agricultural income from the sale of vegetables and other agricultural produce - Tribunal directing the AO to accept the agricultural income declared and not to consider any part of the same as income from other sources - HELD THAT - The Tribunal has observed that out of about 15000 saplings of Eucalyptus trees/Nilgiri trees which were planted in 1982-83 it is quite reasonable to assume that atleast 5000 saplings of Eucalyptus trees/Nilgiri trees will grow into full trees in the year 1990-91 relating to AY 1991-92 which could be cut and sold because as per the certificate issued by the Range Forest Officer no permission is required for cutting and sale of Eucalyptus trees/Nilgiri trees. Tribunal as well as CIT(A) are justified in coming to the conclusion that there is no merit in the appeals filed by the Revenue. The assessee HUG owns fertile agricultural land having irrigation facilities from which agricultural income has been shown and accepted by the revenue in earlier years also and the fact of assessee having been alloted agricultural land and 15000 Eucalyptus trees/Nilgiri trees in the year 1982-83 has been certified by Range Forest Officer. We are in complete agreement with the reasonings adopted and findings of fact arrived at by the lower authorities. Decided in favour of the assessee

Summary

Issues:
1. Whether the Tribunal was correct in directing the Assessing Officer to accept the agricultural income declared and not consider any part of it as income from other sources?
2. Whether the decision of the Tribunal was beyond the record and therefore perverse?

Analysis:

Issue 1:
The case involved an appeal against the orders of the Income Tax Appellate Tribunal regarding the treatment of agricultural income by the Assessing Officer. The Assessing Officer had added the agricultural income as income from other sources, which was later deleted by the CIT (Appeals). The Tribunal upheld the CIT (Appeals) decision. The key argument was whether the Tribunal was justified in directing the Assessing Officer to accept the declared agricultural income entirely. The CIT (Appeals) noted that the assessee had provided complete details of income, including agricultural income in the books of accounts. The Tribunal further observed that the revenue had accepted the agricultural income, and the Assessing Officer failed to prove any other source of income. Consequently, the Tribunal and CIT (Appeals) concluded that the declared income should be accepted, as there was no evidence of any other income source.

Issue 2:
The Tribunal's decision was challenged by the revenue, arguing that the Tribunal erred in directing the Assessing Officer to accept the agricultural income without considering other sources. However, the Tribunal and CIT (Appeals) justified their decision based on the evidence presented. The Tribunal highlighted that the planting of Eucalyptus trees/Nilgiri trees in earlier years supported the agricultural income declared by the assessee. The Range Forest Officer's certification regarding the trees planted further validated the income source. Ultimately, the High Court agreed with the lower authorities' reasoning and factual findings, concluding that there was no merit in the revenue's appeals. Consequently, the High Court ruled in favor of the assessee, dismissing the revenue's appeals.

In conclusion, the High Court upheld the Tribunal and CIT (Appeals) decisions, emphasizing the acceptance of declared agricultural income based on the evidence provided and rejecting the revenue's appeal.