ITO Non Corporate Ward 14(3), CHENNAI v. Prabhu Dhanajayan, CHENNAI

ITA 1066/CHNY/2018 | 2012-2013
Pronouncement Date: 10-03-2021 | Result: Dismissed

Appeal Details

RSA Number 106621714 RSA 2018
Assessee PAN AAEHP4043G
Bench Chennai
Appeal Number ITA 1066/CHNY/2018
Duration Of Justice 2 year(s) 11 month(s) 11 day(s)
Appellant ITO Non Corporate Ward 14(3), CHENNAI
Respondent Prabhu Dhanajayan, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 10-03-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 10-03-2021
Last Hearing Date 25-09-2019
First Hearing Date 24-02-2021
Assessment Year 2012-2013
Appeal Filed On 28-03-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI ! ' # % !& BEFORE SHRI V. DURGA RAO JUDICIAL MEMBER AND SHRI G. MANJUNATHA ACCOUNTANT MEMBER ' ./ ITA NOS.1062 1063 1064 1065 1066 & 1067/CHNY/20 18 ( /ASSESSMENT YEARS: 2008-09 TO 2013-14 THE INCOME TAX OFFICER NON-CORPORATE CIRCLE-14(3) CHENNAI. VS. M/S. PRABHU DHANANJAYAN (HUF) 18/1 SOURASTRA NAGAR II STREET CHOOLAIMEDU CHENNAI 600 094. [PAN: AAEHP 4043G] ( /APPELLANT) ( )*#+ /RESPONDENT) #+ - / APPELLANT BY : SHRI G. CHANDRABABU A DDL. CIT )*#+ - /RESPONDENT BY : SHRI T.R. SARATHY C.A .% /DATE OF HEARING : 24.02.2021 /0( .% / DATE OF PRONOUNCEMENT : 10.03.2021 '1 / O R D E R PER V. DURGA RAO JUDICIAL MEMBER : THESE SIX APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-14 CHENNAI DATED 09.06.2017 AND PERTAIN TO ASSESSMENT YEARS 2008-09 TO 2013-14. ITA NOS.1062 TO 1067/CHNY/2018 :- 2 -: 2. FOR THE SAKE OF CONVENIENCE THE FACTS FROM THE ASSESSMENT YEAR 2012-13 IN ITA NO.1066/CHNY/2018 HAS TAKEN WHEREI N THE AO HAS DISCUSSED IN THE ASSESSMENT ORDER IN DETAIL. WE FI ND THAT THE FACTS OF REMAINING OTHER APPEALS ALSO SIMILAR. 3. THE BRIEF FACTS OF THE CASE FOR ASSESSMENT YEAR 2012-13 ARE THAT THE ASSESSEE IS A HUF AND HE IS CARRYING AGRICULTUR AL ACTIVITY BY GROWING MANGO FRUITS AND SELLING THE SAME IN SOUTH EAST ASI AN COUNTRIES AS WELL AS LOCAL MARKET. THE ASSESSEE HAD FILED RETURN OF I NCOME FOR THE ASSESSMENT YEAR 2012-13 ON 30.03.2013 DECLARING TAX ABLE INCOME OF RS. 2 84 754/- AND AGRICULTURAL INCOME OF RS. 29 81 938 /-. IN SUPPORT OF THE AGRICULTURAL INCOME THE ASSESSEE HAS SUBMITTED AN INCOME AND EXPENDITURE STATEMENT AND ALSO THE BALANCE SHEET. IN THE ASSESSMENT ORDER THE AO HAS NOTED THAT THE ASSESSEE IS EXPORT ING MANGOES FROM HIS OWN GARDEN AND PURCHASING AND SELLING THE SAME AND SHOWING IT AS HIS AGRICULTURAL INCOME. THE ASSESSEE HAS SUBMITTED BEF ORE THE AO THAT HE HAS NOT PURCHASED MANGOES FROM THE MARKET TO EXPORT THE SAME BUT HE IS ONLY EXPORTING THE MANGOES THAT ARE GROWN FROM H IS OWN MANGO GARDEN. THE AO HAS ALSO RAISED ONE MORE DOUBT THAT THE ASSESSEE HAS NOT MAINTAINED ANY RECORD THAT WHAT IS THE TOTAL TO NNAGE OF MANGOES GROWN IN HIS MANGO GARDEN AND THEREFORE HE IS OF T HE OPINION THAT AS PER THE REPORT OF THE DISTRICT COLLECTOR THIRUVALLUR W HICH IS BASED ON THE ITA NOS.1062 TO 1067/CHNY/2018 :- 3 -: NATIONAL HORTICULTURE BOARD THAT THE AVERAGE YIELD FOR TREE WHICH IS AROUND 15 YEARS OF AGE IS SHOWN 120 TO 150 KG PER T REE. APPLYING THE OUTER LIMIT OF THE SAID YIELD RANGE 150 KG PER TREE THE ASSESSEE COULD HAVE A BEST PRODUCE OF 90 TONS OF MANGOES AS AGAINS T THE 168.3 TONS SHOWN BY HIM. THUS THERE IS A DIFFERENCE OF 78.3 TONS OF MANGOES WHICH CAN BE SAFELY INFERRED TO HAVE BEEN PURCHASED BY TH E ASSESSEE FROM LOCAL MARKET. 4. ON APPEAL BEFORE LD. CIT(A) IT WAS SUBMITTED TH AT THE ASSESSEE IS IN THE CULTIVATION OF MANGOES AND WHATEVER MANGOES CULTIVATED FROM HIS MANGO GARDEN WERE EXPORTED TO MALAYSIA AND SINGAPOR E AND SUBMITTED THAT THE ENTIRE ACTIVITY OF THE ASSESSEE HAS TO BE TREATED AS AN AGRICULTURE ACTIVITY AND SALE PROCEEDS RECEIVED FROM EXPORT OF THE MANGOES HAS TO BE TREATED AS AN AGRICULTURAL INCOME. IT IS ALSO S UBMITTED BEFORE THE LD. CIT(A) THAT THE AO WITHOUT ESTABLISHING THE FACTS S IMPLY IS HAVING A DOUBT THAT THE ASSESSEE MAY BE PURCHASING SOME OF THE MAN GOES FROM THE LOCAL MARKET AND ESTIMATED THE AGRICULTURAL INCOME WHICH IS NOT CORRECT. HE ALSO SUBMITTED THE REPORT GIVEN BY THE DISTRICT COLLECTOR THIRUVALLUR BASED ON THE NATIONAL HORTICULTURE BOARD THE AO CA ME TO THE CONCLUSION THAT THE 15 ACRES OF MANGO GARDEN CAN PRODUCE ONLY 90 TONS OF MANGOES AS AGAINST ACTUAL PRODUCTION OF THE MANGOES BY THE ASSESSEE IS 168.3 TONS. THE ABOVE OBSERVATION MADE BY THE AO WITHOUT THERE BEING ANY ITA NOS.1062 TO 1067/CHNY/2018 :- 4 -: BASIS THE MANGO PRODUCTION IS BASED ON THE SOIL W EATHER AND VARIETY OF MANGO DEPENDING UPON ALL THESE FACTS MANGO YIELDI NG VARIES FROM PLACE TO PLACE EVEN WITHIN DISTRICT ITSELF. THEREFORE TH E REPORT GIVEN BY THE DISTRICT COLLECTOR THIRUVALLUR BASED ON THE NATION AL HORTICULTURE BOARD CANNOT BE A CONCLUSIVE PROOF AND HE HAS SUBMITTED T HAT THE ENTIRE SALE PROCEEDS HAS TO BE TREATED AS AGRICULTURAL INCOME. 5. THE LD. CIT(A) AFTER CONSIDERING THE DETAILED EX PLANATION GIVEN BY THE ASSESSEE STATED THAT THE ENTIRE SALE PROCEEDS B Y THE ASSESSEE CANNOT BE TREATED AS A BUSINESS INCOME AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. FOR THE SAKE CONVENIENCE RELEVANT PO RTION OF THE ORDER IS EXTRACTED AS UNDER: 6.3 FIRSTLY THE EXPECTED YIELD FROM 15 ACRES OF G ARDEN WOULD BE ONLY 90 TONS (I.E. @ 6 TONS PER ACRE) AS AGAINST 7.5 TO 11 TONS YIELD PER ACRE SHOWN BY THE APPELLANT IN THE SIX YEARS UNDER APPEA L. 6.4 SECONDLY THE POST HARVESTING ACTIVITIES UNDERT AKEN BY THE APPELLANT I.E. GRADING PACKING EXPORTING THE MANGOES TO FOR EIGN COUNTRIES TO FETCH HIGHER PRICES IS A COMMERCIAL ACTIVITY AND H ENCE ANY INCOME CONTRIBUTED BY THESE ACTIVITIES CANNOT BE CONSIDER ED AS AGRICULTURAL INCOME. HENCE THE AO CONSIDERED AND DISALLOWED A SU BSTANTIAL PORTION OF THE AGRICULTURAL INCOME CLAIMED BY THE APPELLANT AND BROUGHT THE SAME TO TAX. 6.5 THE ABOVE VIEWS OF THE AO ARE NOT CORRECT. AS RIGHTLY SUBMITTED BY THE APPELLANT THE AGRICULTURAL INCOME MEANS INCOME DERIVED FROM THE CULTIVATION OF AGRICULTURAL CROPS. THE INCOME DERIV ED FROM THE SALE OF AGRICULTURAL PRODUCE IS ALSO AGRICULTURAL INCOME. T HE SALE OF THE PRODUCE NEED FARM LEVEL. IT IS THE CHOICE OF THE FARMER TO CHOOSE THE PLACE AND METHOD OF SALE. HE CAN SELL THE PRODUCE IN THE FIEL D ITSELF OR HE CAN TAKE THE PRODUCE TO THE AGRICULTURE MARKET FOR SALE OR H E CAN -STORE THE PRODUCE FOR LONGER PERIODS OF TIME AND THEN SELL AT A LATER DATE. IT IS THE CHOICE OF THE FORMER TO CHOOSE THE METHOD AND THE W AY OF MARKETING HIS PRODUCE. THE INTENTION OF THE FARMER IS TO GET THE MAXIMUM PRICE FOR HIS PRODUCE. THE DEPT: CANNOT EXPECT THE FARMER TO SELL HIS FARM PRODUCE IN A PARTICULAR WAY OR AT A PARTICULAR PLACE. ITA NOS.1062 TO 1067/CHNY/2018 :- 5 -: 6.6 THUS THE ACTIVITY OF THE AGRICULTURE DOESNT STOP ONCE THE CROP IS HARVESTED. IT CONTINUES TILL THE FARMER SELLS HIS P RODUCE BY ANY MEANS IN THE MARKET PLACE WHETHER IN INDIA OR ABROAD AS LON G AS THE PRODUCE IS KEPT IN THE FORM OF THE ORIGINAL PRODUCE ITSELF. 6.7 SUPPOSE THE FARMER CONVERTS HIS AGRICULTURAL PR ODUCE INTO A DIFFERENT PRODUCT BY USING A PRODUCTION OR MANUFACTURING PRO CESS; THE PROFIT ATTRIBUTED FOR SUCH A CONVERSION WILL NOT CONSTITU TE AGRICULTURAL INCOME. BUT AS LONG AS THE AGRICULTURAL PRODUCE DOES NOT U NDERGO ANY PRODUCTION OR MANUFACTURING PROCESS THE FARMERS A CTIVITY TILL HE SELLS HIS PRODUCE REMAINS AGRICULTURAL ACTIVITY. 6.8 FOR EXAMPLE IF THE FARMER USES HIS MANGOES FOR THE PRODUCTION OF MANGO PULP OR MANGO JUICE AND MARKETS SUCH PULP OR JUICE IT IS NOT AN AGRICULTURAL ACTIVITY BECAUSE THE PRODUCT PRODUCED IN THE / FARM (MANGOES) GETS CHANGED TO A DIFFERENT PRODUCT (PULP OR JUICE) AND THE INCOME ATTRIBUTABLE FOR SUCH CONVERSION IS NON-AGRI CULTURAL INCOME AND LIABLE FOR TAX. 6.9 IN THE APPELLANTS CASE WHAT IS PRODUCED BY THE APPELLANT IS MANGO FRUITS. THE APPELLANT HAS NOT SUBJECTED THE FRUITS TO ANY MANUFACTURING OR PROCESSING ACTIVITY. THE APPELLANT INSTEAD OF SELLI NG THE FRUIT IN THE LOCAL MARKET EXPORTED THE MANGOES TO A DIFFERENT COUNTRY AND SOLD THE SAME. THE MANGO FRUITS PRODUCED BY THE APPELLANT IS SOLD IN THE SAME FORM. HENCE THIS SALE PRICE REPRESENTS THE SALE OF AGRI CULTURAL PRODUCE WHICH IN TURN CONSTITUTES AGRICULTURAL INCOME UNDER THE I NCOME TAX ACT. THE PLACE AND PRICE AT WHICH THE PRODUCE IS SOLD CANNOT ALTER THE CHARACTER OF THE INCOME AS LONG AS THE PRODUCE REMAINS AN AG RICULTURAL PRODUCE IN ITS ORIGINAL FORM. 6.10 THE AOS CONTENTIONS THAT THE APPELLANT HAD BE EN EXPLORING THE EXPORT MARKET BY A SERIES OF ACTIVITIES AND THUS BE COMES AN ENTREPRENEUR AND HENCE THE ACTIVITY BECOMES BUSINES S ACTIVITY IS NOT CORRECT. A FARMER ALWAYS AIMS AT PRODUCING HIGHER YIELD (PRODUCE) AND SELLS THE SAME AT AN APPROPRIATE MARKET TO MAXIMISE HIS PROFITS. WHEN A FARMER STARTS GROWING A COMMERCIAL CROP FOR THE PUR POSE OF MARKETING THE PRODUCE THE FARMER BECOMES AN ENTREPRENEUR AND THE ACTIVITY WHICH IS AIMED AT MAXIMIZING HIS RETURNS CANNOT BE TERMED AS A BUSINESS ACTIVITY SINCE THE BASIC SOURCE OF THE AC TIVITY IS AGRICULTURE. THUS IT RETAINS THE CHARACTER OF AGRICULTURAL INCOM E AND GETS EXEMPTION UNDER THE INCOME TAX ACT. 6.11 TO UNDERSTAND THE ABOVE IN A BETTER WAY ONE H AS TO GO INTO THE BASICS OF THE NATURE OF AGRICULTURE. THE AGRICULTUR E IS BASICALLY OF TWO TYPES SUBSISTENCE AGRICULTURE (CULTIVATION PREDOM INANTLY FOR ONES OWN/FAMILY CONSUMPTION) AND COMMERCIAL AGRICULTURE (CULTIVATION PREDOMINANTLY FOR MARKETING). IN THE PRESENT DAYS THE FARMERS HAVE TOTALLY SHIFTED FROM SUBSISTENCE AGRICULTURE TO COM MERCIAL AGRICULTURE. CULTIVATION OF CERTAIN CROPS LIKE COTTON SUGAR CAN E TOBACCO ETC. IS ITA NOS.1062 TO 1067/CHNY/2018 :- 6 -: TOTALLY COMMERCIAL BECAUSE THEY ARE MEANT FOR PERS ONAL CONSUMPTION OF THE CULTIVATOR AND ARE MEANT FOR MARKETING ALONE . YET CULTIVATION OF ALL THESE CROPS IS AGRICULTURE AND INCOME DERIVED FROM SUCH CULTIVATION IS AGRICULTURAL INCOME AND EXEMPT FROM TAX. 6.12 ANY INNOVATIVE IDEAS TECHNOLOGIES EMPLOYED T HE METHODS MODES AND STRATEGIES ADOPTED BY THE AGRICULTURIST TO MARK ET HIS AGRICULTURAL PRODUCE AND ALL OTHER STEPS STRATEGIES AND ACTIVIT IES UNDERTAKEN BY THE AGRICULTURIST FOR OBTAINING BETTER PRICE FOR HIS PR ODUCE THOUGH APPEAR TO BE ENTREPRENEURIAL ACTIVITIES IS PART AND PARCEL O F HIS AGRICULTURAL ACTIVITY. 6.13 IN THE PRESENT APPELLANTS CASE SINCE THE APP ELLANTS AGRICULTURAL PRODUCT (MANGOES) REMAINED UNCHANGED THROUGHOUT THE PERIOD AND IS FINALLY SOLD IN THE SAME FORM (AS MANGOES ONLY); AL L THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE I.E. GRADING PACKING E XPORTING THE MANGOES TO OVERSEAS MARKETS CONSTITUTE AGRICULTURA L ACTIVITY AND THE ENTIRE INCOME DERIVED THEREBY CONSTITUTES AGRICULT URAL INCOME AND IS EXEMPT FROM TAX. 6.14 THE NEXT ISSUE TO BE SEEN IS REGARDING THE EXP ECTED YIELD OF MANGOES FROM THE APPELLANTS MANGO GARDEN. AS PER T HE CONTENTION OF THE AO THE EXPECTED MANGO YIELD FROM THE APPELLANT S 15 ACRES OF MANGO GARDEN WILL BE TO THE EXTENT OF 6 TONNES PER ACRE AS AGAINST 7.5 TO 11 TONNES PER ACRE SHOWN BY THE APPELLANT IN DI FFERENT YEARS. FOR THIS PURPOSE THE AO RELIED ON VARIOUS STATISTICAL DATA PUBLISHED BY THE GOVERNMENTAL AGENCIES ETC WHEREIN THE NATIONAL ST ATE AND DISTRICT AVERAGE YIELD WERE REPORTED AT AN AVERAGE OF 150KG PER TREE WHICH WORKS OUT TO SIX (6) TONS PER ACRE. HENCE THE AO CO NSIDERED ONLY 90 TONNES AS THE POSSIBLE MANGO YIELD FROM 15 ACRES AN D DISALLOWED THE BALANCE CLAIM. 6.15 THE ABOVE VIEW OF THE AO IS NOT CORRECT. AS RI GHTLY POINTED OUT BY THE APPELLANT THE AVERAGE YIELD ALWAYS GIVES A DIS TORTED PICTURE. THESE STATISTICS IS THE AVERAGE OF ALL THE MANGO GARDENS WHICH INCLUDE GARDENS OF DIFFERENT AGE GROUPS RANGING FROM TWO (2) YEARS TO SEVENTY (70) YEARS AND ALSO GARDENS THAT ARE SCIENTIFICALLY NOURISHED AND GARDENS THAT ARE TOTALLY NEGLECTED. IN THE APPELLANTS CASE THE APP ELLANTS GARDEN IS A WELL MAINTAINED AND SCIENTIFICALLY MANAGED GARDEN O F PRIME AGE OF ABOUT 20 YEARS. HENCE THE YIELD OF THE APPELLANT IS ALWAYS HIGHER THAN THE AVERAGE YIELD. 6.16 IN INDIA IN GENERAL MANGO TREES ARE GROWN WI TH LITTLE OR NO MAINTENANCE. THIS TYPE OF GARDEN GIVES A RELATIVELY LOW YIELD/INCOME YEAR AFTER YEAR WITH NO/LITTLE MAINTENANCE. MAJORIT Y OF THE MANGO GARDENS IN INDIA FALL UNDER THIS CATEGORY. BUT THAT DOES NOT MEAN THE MANGO TREES DO NOT REQUIRE ANY MAINTENANCE. THE MAN GO TREES OR ANY OTHER AGRICULTURAL PRODUCE RESPOND WELL TO THE MANA GEMENT LIKE REGULAR CULTIVATION FERTILIZATION PLANT PROTECTION SOIL REPLENISHMENT AND OTHER PRACTICES. ONCE THE FARMER PAYS HIGHER ATTENTION T HE YIELD WILL GO UP TO ITA NOS.1062 TO 1067/CHNY/2018 :- 7 -: THE OPTIMUM LEVEL POTENTIALITY AND ALSO PRODUCES GO OD YIELD REGULARLY YEAR AFTER THE YEAR UNLIKE THE GARDENS WITH LITTLE OR NO MAINTENANCE. THEREFORE THE YIELD OF A WELL MAINTAINED/MANAGED M ANGO GARDEN IS ALWAYS MUCH HIGHER THAN THE NATIONAL/STATE/DISTRICT AVERAGE YIELD. IN SUCH A CASE ONE HAS TO SEE THE YIELD POTENTIALITY OF THE VARIETIES GROWN IN THE GARDEN AND NOT THE AVERAGE NATIONAL/STATE/D ISTRICT YIELD. 6.17 FURTHER THE VARIETIES GROWN BY THE APPELLANT IS BANGANAPALLI AND HIMAMPASAND WHICH ARE HIGH YIELDING VARIETIES COMPA RED TO THE SHY (IRREGULAR) BEARERS LIKE MALAGOA ETC. FURTHER A WE LL- MAINTAINED MANGO GARDEN IN ITS PRIME AGE CAN YIELD UP TO 24 TONS P ER ACRE IN A YEAR. 6.18 ON AN AVERAGE A NORMALLY MAINTAINED MANGO ORC HARD GIVES THE YIELD AT THE RANGE OF 5 TO 9 TONS PER ACRE PER YEA R. (SOURCE: PUBLICATIONS OF NATIONAL HORTICULTURE BOARD {NHB.GOV.IN/REPORTFILES/MANGO/MANGO.HTM}) IT SHOUL D BE NOTED HERE THAT THESE ARE ONLY AVERAGE YIELD AND NOT THE YIEL D POTENTIALITY WHICH WOULD BE MUCH HIGHER THAN THE AVERAGE YIELD. NORMAL LY MANGO PLANTS START BEARING AT THE AGE OF 3-4 YEARS AND THE YIEL D MAY BE AS LOW AS 10- 20 FRUITS (2-3KG) PER TREE RISING TO 50-75 FRUITS (10-15KG) IN THE SUBSEQUENT YEARS AND TO ABOUT 500 FRUITS (1 00KG) IN ITS TENTH YEAR. IN THE AGE GROUP OF 20-40 YEARS A TREE BEARS 1000-300 0 FRUITS (200- 600KG) IN A YEAR. THE PRODUCTIVE AGE OF A GRAFTED M ANGO TREE IS USUALLY UPTO 40-50 YEARS AFTER WHICH THE YIELD OF MANGO TR EES DECLINE (SOURCE: PUBLICATION {HTTP:LLWWW.AGRIFARMING.IN!MANGO-FARMIN GI ). NORMALLY 40 TREES PER ACRE ARE PLANTED. HENCE YIELD @ 200 TO 60 0 KG/TREE RESULTS IN 8 TO 24 TONNES PER ACRE. 6.19 THE ABOVE PUBLICATIONS ALSO BROADLY REVEAL THA T THE YIELD OF MANGO VARIES GREATLY DEPENDING UPON THE VARIETY OF THE FR UIT THE MANAGERIAL SKILLS OF THE FARMER WATER AVAILABILITY AND AGRO-C LIMATIC CONDITIONS PREVAILING IN THE REGION FERTILIZATION PLANT PROT ECTION SOIL REPLENISHMENT AND OTHER CULTIVATION& PRACTICES ETC. AGAIN IT SHO ULD BE NOTED THAT THERE ARE ENOUGH INSTANCES WHERE THE FARMER WITH HIS SKI LLS AND RESOURCES HAS BEATEN THE CLIMATIC AND REGIONAL CONSIDERATIONS DRAMATICALLY AND REAPED MORE THAN DOUBLE THE AVERAGE YIELD CONSISTEN TLY. 6.20 FURTHER THE APPELLANT IS WELL EDUCATED AND HA S LOT OF PASSION FOR AGRICULTURE ESPECIALLY FOR HORTICULTURAL CROPS. HE HAS BEEN ATTENDING LOT OF SEMINARS/WORKSHOPS/TRAININGS ETC. FOR UPDATING A ND IMPROVING HIS KNOWLEDGE IN AGRICULTURE. THEREFORE THE APPELLANT BEING AN ENTERPRISING AGRICULTURIST AND COUPLED WITH HIS GOOD RESOURCES A ND HIGH SKILL HAS MADE HIS MANGO GARDEN A MODEL GARDEN WHERE THE YIE LD IS AT THE PEAK OF THEIR POTENTIALITY DEPENDING ON THE VARIETY (BAN GANAPALLH! HIMAMPASAND). 6.21 IN VIEW OF THE ABOVE STATED DETAILED DISCUSSIO NS I AM OF THE CONSIDERED OPINION THAT THE APPELLANTS YIELD IS N OT ABNORMAL AND VERY MUCH REALISTICALLY POSSIBLE DUE TO HIS HARD WORK S CIENTIFIC MANAGEMENT AND BETTER UTILIZATION OF THE RESOURCES. IN FACT T HE APPELLANTS INCURRING OF HIGH FARM EXPENSES ITSELF IS AN EVIDENCE OF MAN AGING THE GARDEN IN A ITA NOS.1062 TO 1067/CHNY/2018 :- 8 -: BETTER AND SCIENTIFIC MANNER WITH GOOD INPUTS LIKE FERTILIZATION TILLING IRRIGATION SOIL REPLENISHMENT PLANT PROTECTION ET C. 6.22 IT IS ALSO IMPORTANT TO MENTION HERE THAT IN THE NORMAL COURSE THE EXPECTED MANGO SALES PER ACRE ON AN AVERAGE WILL BE AROUND RS 50 000/ TO RS 75 000/- OF THE FARMER SELLS THE MANG OES AT FAIR1EVEI. NEARLY 20% WILL BE THE ANNUAL EXPENDITURE RESULTIN G IN A NET PROFIT OF RS.40 000/- TO RS. 65 000/- PER ACRE. THE SAME PROD UCE IN THE SAME CONDITIONS IF BROUGHT TO THE MARKET AND SOLD TO TH E FINAL CONSUMERS IT WILL NORMALLY FETCH DOUBLE PRICE. FURTHER IF THE P RODUCE IS PROPERLY GRADED AND PACKED IN NEAT PACKING MATERIAL IT WILL FETCH STILL BETTER PRICE. IF THE PRODUCE IS EXPORTED TO FOREIGN MARKETS IT W ILL FETCH STILL A HIGHER PRICE. THEREFORE THE APPELLANTS EXPORT SALE OF MA NGOES AND REALIZING SALE PRICE AT 6 TIMES THAN THAT OF LOCAL FARM LEVEL SALES CANNOT BE CONSIDERED AS ABNORMAL OR UNREALISTIC. OF-COURSE I N EACH LEVEL THERE WILL BE ADDITIONAL EXPENDITURE TO BE INCURRED BY TH E FARMER. IN FACT THE EXISTENCE OF HIGHER EXPENDITURE BY THE APPELLANT FO R THESE RESPECTIVE ACTIVITIES ITSELF IS AN INDICATION AND EVIDENCE T HAT THE APPELLANT HAD ACTUALLY ENGAGED IN THESE ACTIVITIES AND REALIZED H IGHER SALE PRICE FOR HIS PRODUCE (MANGOES). IT IS NOT OUT OF CONTEXT TO MENT ION HERE THAT IN THE ASSESSMENT ORDER THE AO HIMSELF HAS OBSERVED THAT THE ASSESSEE HAS RESORTED TO OUT OF BOX THINKING STUDIED AND EXPLOR ED THE INTERNATIONAL MARKETS CAREFULLY AND HAS IDENTIFIED SUITABLE MARKE TS TO EXPORT INVESTED HUGE MONEY IN ADVANCE ON PACKING MATERIAL AND FREIG HT REQUIRED FOR EXPORTING MANGOES TO ABROAD AND HAS BEEN EXPORTING MANGOES ON A REGULAR BASIS FROM YEAR TO YEAR TO THESE COUNTRIES . ALL THESE ACTIVITIES HAVE ADDED VALUE IN REALISING HIGHER SALE PRICE FOR THE MANGOES PRODUCED BY THE APPELLANT. HENCE NO ADVERSE INFEREN CE CAN BE DRAWN IN THIS REGARD. 6.23 THE NEXT ISSUE TO BE EXAMINED IS THE DOCUMENT SUBMITTED BY THE APPELLANT TO THE BANK WHILE AVAILING THE LOAN. IN THE FINANCIAL YEAR 2006- 07 THE APPELLANT SUBMITTED A MONTH-WISE ESTIMATION OF PURCHASES AND SALE OF MANGOES BEFORE OBTAINING A LOAN BASED ON T HIS DOCUMENT THE AO OPINED THAT THE ASSESSEE WAS INDULGING IN PURCHA SE OF MANGOES OUTSIDE THE BOOKS OF ACCOUNTS AND SHOWING THE SAME AS HIS OWN PRODUCE. BEFORE ME AND THE AO THE APPELLANT SUBMIT TED THAT IT WAS ONLY AN ESTIMATION MADE FOR THE PURPOSE OF AVAILING A HIGHER LOAN FACILITY FROM THE BANK AND THE FIGURES IN THE LETTER ARE ON LY PRESUMED AND ESTIMATED ONES AS IF SUCH VOLUME OF MANGOES ARE TO BE PROCURED FROM THE OPEN MARKET. 6.24 THE ABOVE SUBMISSIONS OF THE APPELLANT SEEM TO BE CORRECT. THERE ARE NO EVIDENCES BROUGHT ON RECORD TO SHOW THAT TH E APPELLANT HAD ACTUALLY PURCHASED MANGOES IN ANY OF THE YEARS UNDE R CONSIDERATION. THOUGH THE APPELLANT IN ITS LETTER TO THE BANK SHOW ED THE ENTIRE COST AS PURCHASES ON AN ESTIMATED BASIS IN REALITY MOST OF THE EXPENDITURE INCURRED (OR TO BE INCURRED) BY THE APPELLANT IS ON ACCOUNT OF PACKING MATERIAL COSTS EXPORT (TRANSPORTATION) CHARGES AND LABOUR (GRADING AND PACKING CHARGES). THESE EXPENSES ALONE CONSTITUTE A BOUT 60-80% OF ITA NOS.1062 TO 1067/CHNY/2018 :- 9 -: THE TOTAL COSTS. THE BALANCE REPRESENTS COST OF PRO DUCING THE MANGOES BY THE APPELLANT. 6.25 THE AO HAS NOT BROUGHT ON RECORD ANY CONCRETE OR CORROBORATIVE EVIDENCE TO SHOW THAT THE HAVE BEEN PURCHASED FROM THE OPEN MARKET AT THE PRICE MENTIONED IN THE DOCUMENTS SUBMITTED T O THE BANK BY THE APPELLANT SINCE IT WAS ONLY AN ESTIMATION SUBMITTED BY THE APPELLANT TO THE BANK TO OBTAIN A HIGHER LOAN FACILITY IN THE AB SENCE OF ANY CORROBORATIVE EVIDENCE COLLECTED BY THE AO NO ADVER SE INFERENCE CAN BE DRAWN ON ACCOUNT OF THE ABOVE DOCUMENT GIVEN TO THE BANK. 6.26 IN ANY CASE AS DETAILED IN THE FOREGOING PARA S THE APPELLANTS 15 ACRES OF MANGO GARDEN IS CAPABLE OF PRODUCING TH E MANGOES EXPORTED BY THE APPELLANT DURING THE YEARS UNDER C ONSIDERATION. 6.27 IN VIEW OF THE ABOVE STATED DETAILED REASONS I AM OF THE CONSIDERED OPINION THAT THE APPELLANTS 15 ACRES O F MANGO GARDEN IS CAPABLE OF PRODUCING THE MANGOES EXPORTED BY THE AP PELLANT DURING THE YEARS UNDER CONSIDERATION. MOREOVER THE MANGOES PR ODUCED BY THE APPELLANT IN HIS GARDEN HAVE REMAINED IN THE SAME F ORM OF MANGOES AND SOLD IN THE SAME FORM TO THE FOREIGN COUNTRIES. THE ENTIRE ACTIVITY STARTING FROM GROWING THE MANGOES HARVESTING THEM GRADING PACKING AND EXPORTING THEM ABROAD CONSTITUTES AGRICULTURAL ACTIVITY AND THE ENTIRE SALE PROCEEDS DERIVED BY THE APPELLANT IS NO THING BUT AGRICULTURAL INCOME AND EXEMPT FROM TAX U/S 10 (1) OF THE IT ACT . 6.28 HENCE THE AO IS NOT JUSTIFIED IN COMING TO THE CONCLUSION THAT THE APPELLANTS ACTIVITY OF EXPORT OF MANGOES IS A COMM ERCIAL OR BUSINESS ACTIVITY AND THE INCOME EARNED FROM THE SAME NEEDS TO BE TREATED AS A BUSINESS INCOME. 6.29 AS A RESULT THE FINDING BY THE AO THAT THE A GRICULTURAL ACTIVITY UNDERTAKEN BY THE APPELLANT IS NOTHING BUT A BUSIN ESS ACTIVITY AND THAT THE SAME NEEDS TO BE TREATED AS A BUSINESS INCOME IS NOT FACTUALLY AND LEGALLY TENABLE AND HENCE NOT JUSTIFIED AND NEEDS TO BE SET ASIDE. THEREFORE THE ADDITION MADE BY THE AO ON THIS GROU ND FOR ALL THE AYS UNDER CONSIDERATION ON THIS ISSUE IS DELETED. ON BEING AGGRIEVED THE REVENUE IS IN APPEAL BEFOR E US. 6. WE HAVE HEARD BOTH THE SIDES PERUSED THE MATERI ALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. 7. THE ASSESSEE IS HAVING 15 ACRES OF MANGO GARDEN AND HE IS CULTIVATING THE SAME AND THE YIELD FROM THE MANGO G ARDEN EXPORTED TO ITA NOS.1062 TO 1067/CHNY/2018 :- 10 -: SINGAPORE AND MALAYSIA. ACCORDINGLY TO THE AO THE ASSESSEE PURCHASING THE MANGOES APART FROM THE PRODUCTION FR OM HIS OWN MANGO GARDEN EXPORTING THE SAME TO SINGAPORE AND MALAYSIA THEREFORE HE IS OF THE OPINION THAT THE EXPORTING ACTIVITY CARRIED BY THE ASSESSEE IS A BUSINESS ACTIVITY AND HE ESTIMATED THE AGRICULTURAL INCOME FOR ACRE IS RS. 35 000/- AND REMAINING AMOUNT TREATED AS A BUSINESS INCOME. IN THE ASSESSMENT ORDER THE AO HAS NOT ESTABLISHED THAT T HE ASSESSEE IS PURCHASING MANGOES AND EXPORTING. WE FIND THAT IT IS AN ASSUMPTION OF THE AO TO COME TO THE ABOVE CONCLUSION WITHOUT ANY MATERIAL. THE AO FURTHER CAME TO THE CONCLUSION THAT THE YIELDING FR OM THE ASSESSEES MANGO GARDEN CANNOT BE MORE THAN 90 TONS AS AGAINST 168.3 TONS BASED ON THE REPORT OF THE DISTRICT COLLECTOR THIR UVALLUR. THIS FACT IS EXAMINED BY THE LD. CIT(A) AT LENGTH AND HE GAVE A FINDING THAT THE YIELDING OF THE MANGOES DEPEND UPON THE SOIL MAINT ENANCE VARIETY OF MANGOES AND OTHER ASPECTS AND THE REPORT OF THE DIS TRICT COLLECTOR IS NOT A CONCLUSIVE PROOF. WE ARE FULLY AGREEING WITH THE LD. CIT(A) ON THIS COUNT. WE ARE ALSO OF THE OPINION THAT THE REPORT OF THE DISTRICT COLLECT THIRUVALLUR IS NOT A CONCLUSIVE PROOF. THE LD. CIT (A) HAS CONSIDERED ALL THE FACTS AND CAME TO THE CONCLUSION THAT THE ACTIV ITY CARRIED BY THE ASSESSEE IS AN AGRICULTURAL ACTIVITY AND DIRECTED T HE AO TO DELETE THE ADDITION. WE FIND NO REASON TO INTERFERE WITH THE O RDER PASSED BY THE LD. CIT(A). ITA NOS.1062 TO 1067/CHNY/2018 :- 11 -: 8. IN THE RESULT APPEAL FILED BY THE REVENUE IN IT A NO.1066/CHNY/2018 IS DISMISSED. 9. AS FAR AS OTHER APPEALS IN ITA NOS. 1062 1063 1064 1065 & 1067/CHNY/2018 FILED BY THE REVENUE ARE CONCERNED THE FACTS AND ISSUES ARE THE SAME. THEREFORE NO SEPARATE ADJUDI CATION IS REQUIRED FOR THE ABOVE APPEALS. THUS ALL THE APPEALS IN ITA NOS . 1062 1063 1064 1065 & 1067/CHNY/2018 FIELD BY THE REVENUE ARE ALSO DISMISSED. 10. IN THE RESULT ALL THE SIX APPEALS FILED BY TH E REVENUE ARE DISMISSED. ORDER PRONOUNCED ON 10 TH MARCH 2021 IN CHENNAI. SD/- SD/- ( ! ' # ) (G. MANJUNATHA) % /ACCOUNTANT MEMBER ( ) (V. DURGA RAO) /JUDICIAL MEMBER /CHENNAI 2 /DATED: 10 TH MARCH 2021 EDN SR. PS '1 ).34 54(. /COPY TO: 1. #+ /APPELLANT 2. )*#+ /RESPONDENT 3. ' ' 6. ( )/CIT(A) 4. ' ' 6. /CIT 5. 47 ). /DR 6. 8 9 /GF