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TMI Blog2015 (11) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... found that the assessee is not engaged in coffee processing activity and the assessee is only selling the sun dried coffee seeds. In other words, the assessee is selling cured coffee seeds. If the assessee is selling only cured coffee seeds, the provisions of rule 7B(1) would come into operation. Therefore, the Commissioner of Income-tax (Appeals) may not be correct in observing that the provisions of rule 7B are not applicable in case the assessee is selling only the sun dried coffee seeds and not engaged in other processing activity. Therefore, this Tribunal is of the considered opinion that income from coffee estate has to be computed by applying rule 7B of the Income- tax Rules, 1962. Therefore, the order of the Commissioner of Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first issue that arises for consideration is with regard to addition of ₹ 36,53,083 under the head Income from other sources . According to the learned Departmental representative, the assessee claimed ₹ 23,55,490 as agricultural income from the coffee estate. The Assessing Officer found that the assessee owned a coffee estate to the extent of 21.20 hectares. The Assessing Officer found that the possible yield from one hectare of land is 948 kgs for Robusta variety for the financial year 2005-06. In fact, the Kerala Coffee Board estimated the yield at 711 kgs per hectare. Since the estate of the assessee is situated in the State of Kerala, the Assessing Officer estimated the maximum coffee productivity from 21.20 hectares of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,55,490. However, the Assessing Officer disallowed a sum of ₹ 49,51,118. According to learned counsel, the Assessing Officer disbelieved the claim of the entire agricultural income. Referring to the order of the Commissioner of Income-tax (Appeals), learned counsel submitted that the disallowance made by the Assessing Officer to the extent of ₹ 49,51,118 was greater than the sale of agricultural produce claimed by the assessee at ₹ 40,03,084. 4. Learned counsel for the assessee further submitted that the Assessing Officer arrived the yield per hectare at 5,849 kgs. and compared the same with the report published by the Coffee Board of India and Kerala Coffee Board. According to learned counsel, the Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted as if it were income derived from business, and twenty-five per cent. of such income shall be deemed to be income liable to tax. (1A) Income derived from the sale of coffee grown, cured, roasted and grounded by the seller in India, with or without mixing chicory or other flavouring ingredients, shall be computed as if it were income derived from business, and forty per cent. of such income shall be deemed to be income liable to tax. Explanation.-For the purposes of sub-rules (1) and (1A) 'curing' shall have the same meaning as assigned to it in sub-section (d) of section 3 of the Coffee Act, 1942 (7 of 1942). (2) In computing the incomes referred to in sub-rules (1) and (1A), an allowance shall be made in respect of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only the sun dried coffee seeds and not engaged in other processing activity. Therefore, this Tribunal is of the considered opinion that income from coffee estate has to be computed by applying rule 7B of the Income- tax Rules, 1962. Therefore, the order of the Commissioner of Income-tax (Appeals) is set aside and the entire issue is remitted back to the file of the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) shall apply the provisions of rule 7B and thereafter compute the income from coffee estate. 7. The next ground of appeal is with regard to disallowance of expenditure to the extent of ₹ 11,90,535. 8. We heard the learned Departmental representative and learned counsel for the assessee. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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