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TMI Blog2014 (12) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's case - Even if, growing of mushroom necessarily involve use of some soil, it could not by itself amount to carrying on a primary agricultural operation in the sense of cultivation of the soil - The assessee has failed to explain as to how it can be claimed that basic agricultural operations were carried out in mushroom production and how expenditure is incurred on primary operations i.e. planting of mushroom etc. and in the secondary operations for preserving it and making it marketable – the AO has rightly treated the income from growing of mushroom as non-agricultural income. There is a further condition that such land should be assessed to land revenue which has also not been fulfilled by the assessee and such land should not be situated within Municipal limits whereas the AO has given a clear-cut finding that the shed in which mushrooms were grown by the assessee, is located within the residential area of Jagadhari which is situated within Municipal limits – thus, the income earned by the assessee from growing of mushrooms cannot be treated as agricultural income – thus, the order of the CIT(A) is upheld – Decided against assessee. - ITA NO. 389, 377/CHD/2012 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Chartered Accountant and filed following reply: The basic material for growing the mushroom includes soil (mitti), wheat straw, husk, gypsum, urea, super potash and can (kissan khad) and molasses, rice husk, sand, gobar, see (wheat) and manual labour. We sow seed in the mixed material and that is kept in polythene bags in the shape of bed also. Then we spray water on all the polythene bags in the shape of bed also. Then we spray water on all the polythene bags. On those bags, we put raakh, mitti and desikhad (made from gobar) which we prepare ourselves. After about 15 days mushroom comes out and after cutting and washing, we sell it fresh in the market. For growing the mushrooms, he has to look after weeding, removing pests, insects etc. tending, pruning harvesting and rendering the produce to make it marketable. We grow mushrooms from November to February only in natural climatic conditions and no electrical appliances used. The mushroom is an agricultural income and for that your kind attention is drawn towards earlier results accepted by the predecessor officers available at pages 8 to 18 of the paperbook. The particular of declared and accepted agricultural income are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cultivation and hence not covered within the definition of 'agriculture'. 6. The Assessing Officer also referred to Circular No. 258, dated 14-6-1979 issued by CBDT in which income from mashrooms growing was directed not to be treated as agricultural income. Relevant paragraph has been extracted by the Assessing officer in his assessment order and reads as under: U/s 10(1) of IT Act agricultural income is exempt from income-tax Act. For this purpose, agricultural income includes any income derived from land situated in India and used for agricultural purposes. Mushrooms are generally grown in a closed chamber and not necessarily in an open field. Is raw material is a composite made of wheat straw, poultry manure calcium carbonate, gypsum and other fertilisers. Different layers of artificial soil are prepared in wooden trays and temperature is controlled to a specified degree by closing the inlets and outlets of air to provide the necessary humidity for cultivation of mushrooms. This process is known as mushroom growing under controlled conditions cannot be regarded as agricultural income and is, therefore chargeable to income tax. The Assessing officer also ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority i.e. Deputy Secretary (ITAI), Central Board of Direct Taxes, Department of Revenue, North Block, New Delhi - 110011 within 30 days of receipt of this letter. 4. Hindi version to follow. Yours faithfully, Sd/- (Shailendra Kumar) CPIO-DCIT-OSD (ITA-I) The above reply from CBDT clearly shows that they have no information which means the Govt has not issued any Circular or Notification in respect of income from the mushrooms. Merely because the Govt has no information, is not a reason for keeping a particular case pending and therefore we find no force in this contention. 11. Notification issued by the Govt of Himachal Pradesh reads as under: Government of Himachal Pradesh Department of Agriculture No. Agr.B-F(10)4/2013 Dated: 8th Nov 2013 Notification The Governor of Himachal Pradesh is pleased to declare the of white butter mushroom (Dhingri) milky mushroom, oyster mushroom and any other edible mushroom whether cultivated or growing naturally as an agricultural activity with immediate effect. By Order Additional Chief Secretary (Agriculture) to the Government of Himachal Pradesh Reading of above Notification clearly shows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er outbuilding, and (ii) the land is either assessed to land revenue in India or is subject to a local rate assessed and collected by officers of the Government as such or where the land is not so assessed to land revenue or subject to a local rate, it is not situated - (A) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board and which has a population of not less than ten thousand; or (B) in any area within the distance, measured aerially, (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and which has a population of more than ten thousand but not exceeding one lakh; or (Il) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and which has a population of more than one lakh but not exceeding ten lakh; or (Ill) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce fit for the market would all be agricultural operations when taken in conjunction with the basic operations. The human labour and skill spent in the performance of these subsequent operations cannot be said to have been spent on the land itself. The mere performance of these subsequent operations on the products of the land, where such products have not been raised on the land by the performance of the basic operations, would not be enough to characterise them as agricultural operations these subsequent operations must necessarily be in conjunction with and in continuation of the basic operations which are the effective cause of the products being raised from the land. The subsequent operations divorced from the basic operations cannot constitute by themselves agricultural operations. Only if this integrated activity which constitutes agriculture is undertaken and performed in regard to any land can that land be said to have been used for 'agricultural purposes and the income derived therefrom be said to be agricultural income derived from the land by agriculture, u/s 2(I) of the Indian Income-tax Act, 1922. Agriculture comprise within its scope the basic as well ..... X X X X Extracts X X X X X X X X Extracts X X X X
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