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TMI Blog2004 (12) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... ted Company. It is primarily engaged in business of real estate development viz., acquiring, planning, developing and offering consultancy in the field of Real Estate. The assessee also has the necessary infrastructure to oversee construction work. A company by name M/s. Land Base India Ltd. (M/s. LBIL in short) was creating an international standard golf courts comprising inter alia of 18 hole championship course, a 9 hole executive course, and a club house collectively known as a Classic Golf Resorts. This was to be developed at Gurgaon, near New Delhi. For the purpose of use in the golf Court M/s. LBIL required large quantity of special grass. For the purpose of growing such special quality grass for use in its golf courts M/s. LBIL was looking for a suitable stretch of agricultural land, where this special quality grass can be grown. The assessee owned and possessed agricultural land measuring 22.21 acres. M/s. LBIL entered into a lease agreement dated 30-6-1996 in respect of the land owned by the assessee. The assessee exclusively for the purpose of growing a specialized grass, seeds/plantations, which were to be imported from Bangkok, leased the land to M/s. LBIL. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an indicator to the fact that the land in question was never intended to be acquired and put to use for agricultural purposes. In this regard the Assessing Officer referred to the fact that the assessee was primarily only engaged in the business of real estate development. The Assessing Officer also referred to the fact that there was an agreement dated 4-2-1994 between M/s. LBIL and the assessee whereby the assessee was engaged as a consultant to carry out certain work in respect of a project undertaken by M/s. LBIL. The Assessing Officer also made a reference to the MoU dated 21-5-1994 under which the assessee agreed to acquire certain agricultural lands in the adjacent villages of Distt. Gurgaon for the purpose of planned development of lands and converting it into various forms with common facilities of appropriate sizes for the purpose of selling by one M/s. Silver Line Holdings (P.) Ltd. According to the Assessing Officer the purpose of acquiring agricultural land by the assessee in the adjacent villages of Distt. Gurgaon was only in furtherance of making it available for development by M/s. Silver Line Holdings (P.) Ltd. and not for the purpose of carrying out agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... think that agricultural products must be in the nature of food products only, such as grains, vegetables or fruits. This is not correct. The correct position of law, as is spelt out in various judicial decisions, is that agricultural products would include any crop, tree, plantation or other products or produce, whether these be hemp, indigo, flax, jute, cotton, spices, tobacco, coffee, tea, betel etc. In this case, the specialized grass has been grown over and over again during the year after cultivation and performing various operations on the land, as detailed by the ld. AR. All these operations were in the nature of agricultural operations. It has been held by the Hon ble Allahabad High Court in the case of CIT v. Smt. Kaneez Umma Laila Taxation 35(1)-8, that sale proceeds of trees which were planted and nurtured by manual labour and were not spontaneous growth is agricultural income. The real test, therefore, is whether this grass was produced by spontaneous growth or by performing agricultural operations. It is amply clear from the discussion in the preceding paragraphs that agricultural operations were performed for growing this specialized grass. Keeping in view the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered the rival submissions. We shall first refer to the definition of Agricultural income as contained in the Income-tax Act. Section : 2 Definitions . In this Act, unless the context otherwise requires, (1)****** (1A) "agricultural income" means ( a )any rent or revenue derived from land which is situated in India and is used for agricultural purposes; ( b )any income derived from such land by ( i )agriculture; or ( ii )the performance by a cultivator or receiver or rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market; or ( iii )the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph ( ii ) of this sub-clause; ( c )any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any process mentioned in paragraphs ( ii ) and ( ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral land by agricultural operations either sale of the agricultural produce as such or sale of such produce after carrying out such process ordinarily employed to render the produce raised or received by him fit to be taken to market. ( c )Income from building situate within the vicinity of the agricultural land which is occupied by the cultivator to enable him to carry on agricultural operations either for his own residence or as a store house provided the land is assessed to land revenue of local rate or the land is situate in Urban Areas. 12. In the present case, the claim of the assessee is that income falls under category ( b ). The Hon ble Supreme Court in the case of Raja Benoy Kumar Sahas Roy ( supra ) has laid down that agriculture involves tilling of the land, sowing of the seeds, planting and similar operations on the land. These basic operations taken on the land which requires human skill and labour enables bringing out of the soil the sprouts and thereafter process such as weeding, digging, tending, pruning, cutting, other process rendering produce fit for the market are all undertaken. The Hon ble Supreme Court in the case of Raja Benoy Kumar Sahas Roy ( su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L had agreed to pay a sum of Rs. 5 lakhs to the assessee per month towards supply of specialized grass. The details of the expenses incurred in carrying out cultivation had been duly furnished by the assessee and the details in this regard are placed at page Nos. 25 to 30 of assessee s paper book. The Assessing Officer has not found any fault with the items of expenditure claimed to have been incurred by the assessee. The fact that the assessee was primarily a consultant in real estate business will not be enough to conclude that the income in question is not one from the agriculture. The fact that the assessee originally declared this income under the head service charges and later on revised the return of income claiming it to be agricultural income is also not relevant. The law is well settled that the assessee is entitled to resile from a position erroneously taken when filing the return. The ld. Departmental Representative sought to place reliance on the decision of the Delhi Bench of the ITAT in the case of Proagro Seeds Co. Ltd. v. Jt. CIT [2003] 126 Taxman 37 (Delhi)(Mag.). We have perused the said decision. It was a case where the assessee was growing various kinds o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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