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TMI Blog2011 (8) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural operations for the produce to generate agricultural income and has been returned with appropriately by the assessee and is therefore, setting aside the impugned order of the learned CIT(A), direct the Assessing Officer to consider the same as exempt under the provisions of section 10(1) of the Income-tax Act,1961 - Decided in favour of assessee. - 101 TO 104 (CUTTACK) OF 2011 - - - Dated:- 12-8-2011 - K.K. GUPTA, K.S.S. PRASAD RAO, JJ. P.K. Mishra for the Appellant. A. Bhattacharjee for the Respondent. ORDER 1. These appeals for the assessment years 2004-05, 2005-06, 2006-07 and 2007-08 arise out of the common order of the learned Commissioner of Income-tax (Appeals) common to these years date 26-11-2010. 2. Common issue has been raised by the assessee agitating that the learned CIT(A) failed to observe that having considered agricultural operation carried out by the assessee for sale of bonsai and other plants the basic agricultural operation had finished till such time the sapling was implanted in the premises of the assessee's agricultural land being the Proprietor of M/s. R.K. Integrated Farm following the Apex Court's decision in the case of CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agricultural land (Farm House), (ii) human skill is employed, (iii) the cultivation of Bonsai is done by planting tree in the soil of Farm House, (iv) while planting the trees in soil primary operations like tilling of land, planting, manuring, watering etc is performed, (v) subsequent operation like pruning, cutting etc is also performed, (vi) the plant when transported if again uprooted and planted in Polythene bag for transportation. This system of transportation does not change the nature of Income from agriculture to Business. The assessee has relied upon a number of cases decided by different courts in favour of the assessee, one among them is CIT v. Soundarya Nursery [2000] 241 ITR 530/[2002] 123 Taxman 372 (Mad.). To relate to end the controversy with different views, the Legislature finally inserted Explanation 3 to section 2(1A) by Finance Act 2008, which states - "For the purpose of this clause, any income derived from sapling or seedling in a nursery shall be deemed to be agricultural in come." As this is an explanation and not an amendment, it was applicable to earlier years also. Continuing his arguments on the Assessing Officer's placing reliance on the cited Apex C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of nursing the trees planted by them. It cannot be denied that so far as those trees are concerned, the income derived therefrom would be agricultural income. In view of the fact that the forest is more than 150 years old, the areas which had thus become denuded and replanted cannot be considered to be negligible. The position therefore is that the whole of the income derived from the forest cannot be treated as non agricultural income. If the enquiry had been directed on proper lines, it would have been possible for the Income-tax authorities to ascertain how much of the income is attributable to forest of spontaneous growth and how much to trees planted by the proprietors. But no such enquiry had been directed, and in view of the long lapse of time, we do not consider it desirable to direct any such enquiry now. The expenditure shown by the assessee for the maintenance of the forest is about Rs. 17,000 as against a total income of about Rs. 51,000. Having regard to the magnitude of this figure, we think that a substantial portion of the income must have been derived from trees planted by the proprietors themselves. As no attempt has been made by the Department to establish w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd is used for agriculture purpose. The operations carried out by the assessee are agricultural operations therefore rendered as agricultural income. The Assessing Officer and the learned CIT(A) have rejected the claim of the assessee on the ground that the activities carried out by the assessee do not fall within the meaning of the word "agriculture". The meaning of the word "agriculture" is no more res integra in view of the judgment of Hon'ble Apex Court, which the learned Counsel for the assessee has reiterated as mentioned above. "Agricultural operation" in its primary sense denotes the cultivation of the field and is restricted to the cultivation of land in the strict sense of the term meaning thereby tilling of the land, sowing of seeds, planting and similar operations in the land. Having said so, Hon'ble Supreme Court let the same to be considered for adjudication in the light of the facts of the assessee's case insofar as the activities carried out by the assessee after having recognized a particular plant to be produced as bonsai carried out the same activities such as implanting a sapling to the soil, preparing soil bed in accordance with the nature of the plant to grow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was carried out at the farm of the assessee, a nursery and the bonsai plant grown in the farm had been physically verified by the Assessing Officer was therefore only an exercise by the Assessing Officer and the learned CIT(A) to bring on record the case law to be distinguished by assessee before the authorities below. The substantial question therefore of the assessee having carried out agricultural operation in the impugned assessment years is merely on the basis of presumptions and assumptions in the minds of the assessing authorities to the extent that nature which is full of surprises and bounty has been subjected to consideration when income was proposed to be considered as non-agricultural. A farmer nurtures a plant or saplings which it gets after sowing seeds is also done by the assessee when it is to grow till such time it gets the fruit of labour as a miniature to be considered as carrying out agricultural operations for the produce to generate agricultural income and has been returned with appropriately by the assessee and is therefore, setting aside the impugned order of the learned CIT(A), direct the Assessing Officer to consider the same as exempt under the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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