2015 (7) TMI 14 - HC - Income Tax

Agricultural income - assessee was in possession of the land in question for the cultivation of sugarcane from the Maharashtra State Farming Corporation (MSFC) - Held that - We find that the CIT(A) and the Tribunal have correctly recorded a finding of fact that the Respondent-Assessee did carry on activity of cultivation of sugarcane and the income derived therefrom, is agricultural income. This finding of fact is neither shown to be perverse and/or arbitrary. Therefore, no substantial question of law arises for consideration in the appeal as filed against findings of fact. - Decided against revenue.

Summary

Issues:
Appeals challenging common order of the Income Tax Appellate Tribunal regarding treatment of income as agricultural income for Assessment Years 2002-03 and 2003-04.

Analysis:
The appeals under Section 260A of the Income Tax Act, 1961 contested the Tribunal's order regarding the treatment of income as agricultural income for the mentioned Assessment Years. The Revenue questioned the Tribunal's decision not to interfere with the Commissioner of Income Tax (Appeal)'s ruling that specified amounts should be considered agricultural income under Section 2(1A) of the Act.

The Respondent, an agriculturalist in Kolhapur, declared a 'Nil' total income for the Assessment Years 2002-03 and 2003-04 due to agricultural income exclusion. The Assessing Officer disallowed the exemption, citing lack of proof of land ownership by the Respondent. However, the Commissioner of Income Tax (Appeals) determined that the Respondent possessed the land for sugarcane cultivation from the Maharashtra State Farming Corporation (MSFC) based on the agreement terms requiring consideration for land use.

Upon further appeal, the Tribunal confirmed that sugarcane cultivation by the Respondent on MSFC-owned land established a landlord-tenant relationship, as evidenced by the fixed annual payment of Rs. 20 lakhs for land use. Consequently, the Tribunal upheld the Commissioner of Income Tax (Appeals)' decision, deeming the specified amounts for the Assessment Years 2002-03 and 2003-04 as non-taxable agricultural income.

The High Court noted that both the Commissioner of Income Tax (Appeals) and the Tribunal correctly determined that the Respondent engaged in sugarcane cultivation, resulting in agricultural income. As the factual findings were not proven to be unreasonable or capricious, no substantial legal questions arose for consideration in the appeals against these findings. Consequently, the High Court dismissed both appeals without costs.