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2017 (8) TMI 473 - AT - Income TaxClaim of exemption u/s.10(1) - agricultural nature of the income earned out of the sale of the flowering plants developed out of imported mother plants in Tissue Culture Laboratory - Held that - As decided in assessee s own case for earlier AYs 2017 (8) TMI 445 - ITAT PUNE the authorities belong indeed erred in law and on facts of this case in holding that the impugned income is not agricultural income. We, therefore, direct the Assessing Officer to treat the said income as agricultural income under section 2 (1A)(b)(i) of the Act. As a corollary to this direction, the Assessing Officer shall also exclude the said income from the total income under section 10(1) of the Act. The assessee gets the relief accordingly.
Issues Involved:
1. Agricultural nature of income earned from the sale of flowering plants developed from imported mother plants in a Tissue Culture Laboratory. 2. Exemption of such income under Section 10(1) of the Income Tax Act. 3. Disallowance on account of depreciation on goodwill. Detailed Analysis: 1. Agricultural Nature of Income Earned from Tissue Culture Products: The primary issue is whether the income derived from the sale of flowering plants developed from imported mother plants in a Tissue Culture Laboratory qualifies as agricultural income. The assessee, engaged in plant floriculture and tissue culture, claimed this income as exempt under Section 10(1) of the Income Tax Act. The Assessing Officer (AO) disallowed this claim, leading to the determination of assessed income at ?8,04,49,290, inclusive of the disallowed exemption amounting to ?7.35 crores. 2. Exemption Under Section 10(1) of the Income Tax Act: The assessee relied on previous Tribunal decisions in its favor for similar issues in Assessment Years 2004-05 and 2009-10. The Tribunal had previously ruled that income from floriculture and tissue culture is agricultural income under Section 10(1). The First Appellate Authority (CIT(A)) directed the AO to grant relief based on these precedents. The Revenue, dissatisfied with this decision, appealed against it. 3. Disallowance on Account of Depreciation on Goodwill: Although mentioned, the judgment primarily focuses on the agricultural income exemption issue. The disallowance on account of depreciation on goodwill is noted but not elaborated upon in the detailed judgment. Tribunal's Analysis and Decision: The Tribunal reviewed the submissions and previous decisions. It reiterated that the issue had been consistently decided in favor of the assessee in earlier years. The Tribunal cited detailed excerpts from previous rulings, emphasizing that operations involving tissue culture and floriculture qualify as agricultural operations. These operations involve significant human skill and labor, aligning with the definitions provided by higher judicial authorities, including the Supreme Court and High Courts. The Tribunal referenced multiple decisions, including: - ITA No. 146/PN/2008 for A.Y. 2004-05. - ITA No. 2217/PN/2012 for A.Y. 2009-10. - ITA No. 1110/PN/2011 for A.Y. 2007-08. - ITA Nos. 1274 to 1278/PN/2010 for A.Ys. 2001-02, 2003-04, 2005-06, and 2006-07. These decisions consistently held that income from tissue culture and floriculture is agricultural income. The Tribunal also noted that the Revenue had not provided any new material or distinguishing facts for the year under consideration. Conclusion: The Tribunal concluded that the matter is covered in favor of the assessee, with the issue pending before the Hon'ble Bombay High Court. Following the principles of consistency and previous rulings, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order. Final Decision: The appeal of the Revenue was dismissed, and the order was pronounced in the open court on June 9, 2017.
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