2015 (9) TMI 640 - AT - Income Tax

Exemption u/s 10(1) - Disallowance of agriculture income - AO disallowed the amount on the reason that this is not agriculture income but income from business operations - Held that - No reason to interfere with the order of the Ld.CIT(A). Not only that, the issue in earlier years was already crystalised in favour of assessee by the decision of the Hon ble High Court of Judicature of Andhra Pradesh at Hyderabad in assessee s own case in 2014 (2) TMI 1197 - ANDHRA PRADESH HIGH COURT . Hon ble High Court on similar questions raised in AY. 2008-09 has upheld the order of the ITAT in that year - Decided against Revenue.

Summary

Issues involved:
1. Disallowance of agriculture income claimed as business income.
2. Claim of exemption u/s 10(1) of the Income Tax Act for income generated from seed production.

Analysis:
1. The case involved an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals)-V, Hyderabad, regarding the treatment of income from seed production as agriculture income. The assessee, a company engaged in seed production and wind power generation, claimed deduction u/s. 80IA(2) and exemption u/s 10(1) of the Act. The Assessing Officer disallowed the agriculture income of &8377; 37,54,466, stating it was not agriculture income but from business operations. The CIT(A) allowed the claim based on past decisions and ITAT orders, holding the income from seed production as agricultural income eligible for exemption u/s 10(1) of the Act. The Tribunal upheld this decision, citing consistent rulings in favor of the assessee and the High Court's affirmation of the same in earlier years.

2. The Tribunal, after considering the rival contentions, found no reason to interfere with the CIT(A)'s order. It noted that the issue had been settled in favor of the assessee by the High Court's decision in a previous year, where it upheld the ITAT's ruling that seed production is a product of agricultural activity and not subject to taxation under the Income Tax Act. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to treat the income generated from seed production as agricultural income exempt u/s 10(1) of the Act. The Tribunal's decision was based on the precedents set by past orders and the High Court's affirmation of the agricultural nature of seed production.

In conclusion, the Tribunal's judgment affirmed the treatment of income from seed production as agricultural income eligible for exemption u/s 10(1) of the Income Tax Act, based on consistent rulings, past decisions, and the High Court's endorsement of the same.