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TMI Blog2022 (12) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... e same which are sold to various seed Companies like Godrej Seeds, Nath Seeds, Super Agri Seeds etc. According to the learned Assessing Officer, however, the assessee produces both foundation seeds and hybrid seeds and for production of such hybrid seeds, the assessee carries out research and development activities which involve scientific study of the parent seed and hybridisation of different varieties of parent seeds so as to evolve the high yielding variety of hybrid seeds. 3. For the assessment year 2014-15, assessee filed the return of income on 29/11/2014 declaring an income of Rs. 18,49,643/- under the normal provisions of the Income Tax Act, 1961 (for short "the Act") and nil income under the MAT provisions. As stated above, learned Assessing Officer is of the opinion that the assessee is producing both foundation seeds and hybrid seeds; that for production of hybrid seeds, the assessee carries out research and development activity which involves scientific study of the parent seed and hybridisation of different varieties of the parent seeds so as to evolve the high yielding variety of hybrid seeds; that sells such hybrid seeds in the market for agricultural production by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer to verify the same and to allow. 6. Challenging the deletion of Rs. 2,39,14,201/- claimed under section 10(1) of the Act, Revenue preferred ITA 1436 /Hyd/ 2017 stating that the Ld. CIT(A) deleted the same without appreciating the fact that the activity of development and marketing of seeds is purely a commercial activity bereft of carrying of agricultural activity and the assessee itself did not undertake any agricultural operations but procured hybrid seeds from farmers and as such the activities carried out by the farmers can only be said to be agricultural activities and not those of the assessee. Ld. DR argued in this regard that the facts involved in this case are identical to the ones in the case of M/s Nuziveedu Seeds Ltd for assessment year 2011-12, which is pending before the Hon'ble High Court. 7. Aggrieved by the confirmation of the addition of Rs. 25.75 lakhs under section 40(a)(ia) of the Act and the direction in respect of the addition of Rs. 4,33,892/- towards the delay in payment of provident fund, assessee preferred ITA 1314/Hyd/2017 stating that for the assessment year 2014-15 the provisions under section 40(a)(ia) of the Act were not applicable o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer that basing on the selection and requirement of different Companies they produce the foundation seeds of a particular hybrid variety in volumes required, by engaging daily labour directly under their supervision, and on the leased forms, by conducting the operations like watering, using required fertilisers and manures etc., and, therefore, the whole process of production and multiplication is carried on the leased lands by implementing normal agricultural operations with the aid of improved/better farming activities. Further according to the assessee they are not in the business of selling, licensing, or otherwise transferring research material/Knowhow to any outside party nor do they carry out research for third party on job basis. The sum and substance of the contention of the assessee before the learned Assessing Officer was that they are growing breeder seeds by repeatedly cultivating and replanting the varieties of crops to produce the hybrid foundation seed, which they are producing in volumes according to the choice of the seeds Companies, and, therefore, the Revenue earned by them from the sale of foundation seed to seed Companies is agricultural income. 11. On the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hybrid seeds, which activity the assessee has not been performing. 14. On a careful consideration of the assessment order in the light of the submissions made by the assessee, Ld. CIT(A) reached a conclusion that the assessee is in the business of production of foundation seeds, cultivating the same by conducting agricultural operations on the agricultural land and then selling the same to various seed Companies. Then the Ld. CIT(A) applied the decision of a Coordinate Bench of this Tribunal in the case of Prabhath Agri Biotech (2016) 68 taxmann.com 391 (Hyderabad-Tribunal). 15. It is pertinent to note that in Prabhath Agri Biotech (supra), a coordinate Bench of this Tribunal referred to the decision of the Hon'ble High Court of Judicature of Andhra Pradesh at Hyderabad in assessee's own case in ITA No. 88/2014 dt. 21/02/2014 on similar questions raised in AY. 2008-09 wherein the Hon'ble court held that,- "We are unable to accept this farfetched idea that artificial production of seeds can be sold or used for commercial purpose. May be a few hybrid seeds could be produced by artificial method in a laboratory. The seeds so produced with non-agricultural activity again wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. CIT(A), we do not find anything illegality or irregularity in the conclusions reached by the Ld. CIT(A) and accordingly uphold the same. Grounds of appeal of the Revenue are accordingly dismissed. 19. Now coming to the appeal of the assessee, ground No. 3 relates to the addition of Rs. 4,33,892/- towards delay in remittance of provident fund. There is no dispute on facts and as a matter of fact, learned Assessing Officer noted the due date for payment and the actual date of payment and thereby demonstrated that the remittance was beyond the due date specified in the Provident Fund Act. What all the Ld. AR said is that all the payments were made before the due date of filing of return of income under section 139(1) of the Act. This issue is, however, squarely covered by the decision of the Hon'ble Apex Court in the case of Checkmate Services Pvt. Ltd., Vs. CIT, Civil Appeal No. 2833/2016 by order dated 12/10/2022 against the assessee. Respectfully following the same, dismiss ground No. 3 of appeal of assessee. 20. Now coming to the disallowance of Rs. 25.75 lakhs is concerned, it consists of two amounts. One is towards the Director's remuneration to the tune of Rs. 24 la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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