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Issues:
1. Whether the lease rent received by the assessee constitutes agricultural income for the assessment year 1975-1976. Analysis: The Departmental appeal in this case revolves around the assessment of the lease rent received by the assessee from M/s. Hoechst Pharmaceuticals Ltd. The primary contention is whether this lease rent of Rs. 24,636 should be considered as agricultural income. The assessee, a real estate partnership firm, argued that the lease rent qualifies as agricultural income as the lessee was using the land for growing medicinal plants for its Research Centre and the land was assessed to land revenue in India. However, the Income Tax Officer (ITO) disagreed, stating that the land was not previously used for agricultural purposes, leading to it being treated as taxable income. The Appellate Assistant Commissioner (AAC) held that for income to be classified as agricultural, three conditions must be met: the revenue should be derived from land, the land should be in India, and the land should be used for agricultural purposes. The AAC found all these conditions satisfied in this case, referencing expert opinions and a certificate from M/s. Hoechst Pharmaceuticals Ltd. The Departmental Representative argued that the land was intended for industrial use based on the lease agreement, and growing medicinal plants was incidental. Legal precedents were cited to support this argument. After considering the arguments and facts presented, the President of the Appellate Tribunal concluded that the Revenue's arguments lacked merit. The President emphasized that if the conditions specified in section 2(1)(a) of the Income Tax Act, 1961 are fulfilled, the income from the land should be considered agricultural income. The President highlighted that the land being used for agricultural purposes in the relevant year is crucial, regardless of its past use. Additionally, since the land was assessed to land revenue, it further supported the classification of the income as agricultural. As a result, the appeal was dismissed, affirming that the lease rent indeed constituted agricultural income for the assessee.
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