Sri Rajendra Kumar Agarwala, Jalpaiguri v. I. T.O. Wd-2(1), Jalpaiguri, Jalpaiguri

ITA 1492/KOL/2009 | 2000-2001
Pronouncement Date: 07-05-2010

Appeal Details

RSA Number 149223514 RSA 2009
Assessee PAN ADBPG1080G
Bench Kolkata
Appeal Number ITA 1492/KOL/2009
Duration Of Justice 8 month(s) 13 day(s)
Appellant Sri Rajendra Kumar Agarwala, Jalpaiguri
Respondent I. T.O. Wd-2(1), Jalpaiguri, Jalpaiguri
Appeal Type Income Tax Appeal
Pronouncement Date 07-05-2010
Appeal Filed By Assessee
Bench Allotted SMC
Tribunal Order Date 07-05-2010
Assessment Year 2000-2001
Appeal Filed On 25-08-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : KOLKATA [ BEFORE SHRI D.K.TYAGI J.M. & SHRI B.C. MEENA A.M. ] I.T.A.NO. 1492 (KOL) OF 2009 ASSESSMENT YEAR 2000-01 SRI RAJENDRA KUMAR AGARWALA -VS- INCOME -TAX OFFICER WARD-2(1) JALPAIGURI (PAN-ADBPG1080G) JALPAIGURI. ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : N O N E RESPONDENT BY : SRI O.P.AGARWAL. O R D E R PER SRI B.C.MEENA A.M. : THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 10.06.2009 OF C.I.T.(A) JALPAIGURI PERTAINING TO ASSESSMENT YEAR 2000-01. THE ONLY GROUND RAISED IN THIS APPEAL BY THE ASSESSEE RELATES TO ADDITION OF RS.55 000/- AS BUSINESS INCOME INSTEAD OF AGRICU LTURAL INCOME CLAIMED BY THE ASSESSEE. 2. IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE HAD SHOWN TOTAL INCOME OF RS.9 3 133/- COMPRISING OF RENTAL INCOME OF RS.33 138/- AND INCOME FROM JU TE BUSINESS OF RS.60 000/-. IN ADDITION TO THE SAID INCOME THE ASSESSEE ALSO DECLARED INCOME OF RS.55 000/- FROM NURSERY BUSINESS AND CLAIMED EXE MPTION ON THE GROUND THAT THE SAME WAS AGRICULTURAL INCOME. THE A.O. DID NOT ALLOW THE CLAIM OF THE ASSESSEE AND TREATED THE SAID INCOME OF RS.55 000/- AS INCOME FROM BUSINESS AS ACCORDING TO HIM THERE WAS NO AGRICULTUR AL ACTIVITY AND INCOME FROM GROWING OF TEA SEEDLINGS IS NOT AGRICULTURAL INCOM E. HE PLACED RELIANCE ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF H.H. MAHARAJ VIBHUTI NARAIN SINGH VS. STATE OF UP [65 ITR 364]. THE CASE LAW RELIED UPON BY THE ASSESSEE BEFORE THE A.O. IN THE CASE O F CIT VS. SOUNDARYA NURSERY [241 ITR 530 (MAD)] WAS NOT CONSIDERED AS ACCORD ING TO HIM THAT DECISION RELATES TO GROWING OF FRUIT PLANTS AND FLOWER PLANTS AND NOT TEA SEEDLINGS. 3. ON APPEAL THE C.I.T.(A) CONFIRMED THE ACTION OF THE A.O. IN TREATING THE INCOME FROM TEA SEEDLINGS AS BUSINESS INCOME. THE OBSERVA TION OF THE C.I.T.(A) IS REPRODUCED BELOW :- 2 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE AR A ND ALSO PERUSED THE ASSESSMENT ORDER. THOUGH THE DECISION OF THE MADRA S HIGH COURT CITED BY THE LD. AR MADE IT CLEAR THAT EVEN INCOME FROM P LANTS GROWN IN POTS IS AGRICULTURAL INCOME BUT THE SAME IS NOT RELATING TO GROWING OF TEA SEEDLINGS. IN THAT CASE IT IS APPARENT THAT PLANTS G ROWN ON POTS WERE SOLD. BUT THE LD. AO HAS MENTIONED THAT THE NORMA L PROCEDURE ADOPTED IN GENERAL BY THE PRODUCERS OF TEA SEEDLINGS IS T HAT IN A SMALL PLASTIC CONTAINER MUD IS PLACED WITH REQUIRED FERTILIZER AND S EEDS ARE TRANSPLANTED THEREON AND THEREAFTER THE SAME IS PLACED JUST ON THE SOIL FOR GROWING. THE QUESTION OF CULTIVATION OF LAND AS A WHOLE DOES NOT ARISE AND THERE WAS NO PRIMARY OPERATION OF THE CULTIVATION. IN THE DECISION OF ALLAHABAD HIGH COURT CITED SUPRA HELD THAT EVEN IF THE KEEPING OF A NURSERY NECESSARILY MEANS THE USE OF S OME LAND AND EARTH FOR THE PURPOSE OF REARING PLANTS THAT WOULD NOT BY ITSELF AMOUNT TO CARRYING ON A PRIMARY AGRICULTURAL OPERATION IN THE SEN SE OF CULTIVATING FIELDS. THE ALLAHABAD HIGH COURT HAS FOLLOWED THE GUIDELINES PRESCRIBED BY THE APEX COURT IN THE CASE OF R AJA BENOY KUMAR SAHAS ROY (SUPRA). THEREFORE IN MY OPINION THE DE CISION OF THE ALLAHABAD HIGH COURT IS MORE APPLICABLE TO THE FACT OF T HE CASE THAN THE DECISION OF THE MADRAS HIGH COURT CITED BY THE LD. A.R. IN VIEW OF THE AFORESAID FACT I FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. AO. THE SAME IS CONFIRMED. 4. AT THE TIME OF HEARING BEFORE US NONE APPEARED ON BE HALF OF THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. HOWEVER THE ASSESSEE VIDE HIS LETTER D ATED 24/4/2010 HAS STATED THAT THE GROUNDS OF APPEAL FILED ALONG WITH THE MEM ORANDUM OF APPEAL BEFORE THE TRIBUNAL MAY BE TREATED AS HIS ARGUMENTS IN S UPPORT OF HIS CLAIM. THE SAME IS REPRODUCED BELOW :- THE APPELLANT IS THE OWNER OF A PLOT OF LAND (ABOU T 1 ACRE) IN WHICH AGRICULTURAL ACTIVITY THAT IS TILLING OF LAND MIXI NG OF COW DANG AND OTHER MANURES MAKING OF SHEDS SAWING OF SEEDS WATERING WEEDING DIGGING THE SOIL AROUND THE GROWTH SPRAYING OF CHEMICALS ETC. ARE CARRIED ON FOR CULTIVATION OF TEA SEEDLINGS. THEREAFTER THESE PLAN TS ARE SOLD TO THE LOCAL BUSINESS MAN WHO PUT THEM IN POLY PACKS (SMALL PLAS TIC CONTAINER) AND SELL THEM TO DIFFERENT PARTIES. - THIS FACT WAS EXPLAINED BEFORE THE A.O. AND A WRITT EN EXPLANATION WAS FILED ON 09-09-2002 (COPY ENCLOSED MARKED NO.1 ). IN THE SAID LETTER IN PARA-2 EVERY THING WAS EXPLAINED. BUT THE LD. A.O. IN HIS ORDER OF ASSESSMENT (PAGE2 PARA-1) DID NOT CONSIDER ANY THING BUT SIM PLY OPINIONED THAT THE AGRICULTURAL OPERATION CONDUCTED BY THE OTHER ARE D IFFERENT IN NATURE AND THIS THE ONLY POINT FOR MAKING THE ADDITION. BUT THIS FINDING HAS GOT NO MEANING WHAT THE OTHER BUSINESS MEN ARE DOING IS NOT RELEVANT RATHER WHAT THE ASSESSEE DID IS RELEVANT NEITHER IT 3 IS CLEAR WHEREFROM THE LD. A.Q. GOT THIS INFORMATIO N WHAT THE ASSESSEE DID WAS EXPLAINED BEFORE THE A.O. AN EXPLANATION AND N ECESSARY DOCUMENTS WERE ALSO PRODUCED HENCE THERE IS NO REASON TO REJE CT THE EXPLANATION FILED BY THE APPELLANT. THE COURT DECISIONS CITED BY THE LD. C.I.T(A) IS NO T ALSO RELEVANT IN THE CASE OF THE ASSESSEE. THE APPELLANT IS THE OWNER OF AGRI CULTURAL LAND AND THE BASIC AND SUBSEQUENT AGRICULTURAL ACTIVITIES ARE CA RRIED ON BY HIM SO THERE IS NO CONFUSION ABOUT ITS AGRICULTURAL CHARACTER. T HE BUSINESS OF THE APPELLANT SHOULD NOT BE CONFUSED WITH THE BUSINESS OF THE OTHER PERSONS THEY MAY NOT HAVE AGRICULTURAL LAND OR DO NOT CARRY ON ANY AGRICULTURAL ACTIVITY. THAT THE LD. C.I.T.(A) IN HIS ORDER HAS STATED THAT THE DECISION OF THE MADRAS HIGH COURT IN CIT V. SOUNDARYA NURSERY 241 I TR 530 IS NOT RELATING TO TEA SEEDLING. BUT IT DOES NOT NEGATE TH E VERY PRINCIPAL OF AGRICULTURAL INCOME. 5. ON PERUSAL OF THE APPELLATE ORDER WE FIND THAT THE C.I. T.(A) HAS DISTINGUISHED THE DECISION OF HONBLE MADRAS HIGH COURT IN T HE CASE OF CIT VS. SOUNDARYA NURSERY (SUPRA) RELIED UPON BY THE ASSESSEE B Y HOLDING THAT EVEN THOUGH THE HONBLE HIGH COURT HAS HELD THAT INCOME FROM PLANTS GROWN IN POTS IS AGRICULTURAL INCOME BUT THE SAME IS NOT RELATING TO GROWING OF TEA SEEDLINGS. HONBLE ALLAHABAD HIGH COURT IN THE CASE OF H.H. M AHARAJA VIBHUTI NARAIN SINGH VS. STATE OF UP (SUPRA) HAS DEALT WITH THE QUESTION WHETHER THE INCOME FROM THE NURSERY CONSTITUTED AGRICULT URAL INCOME ? THE ANSWER WAS NEGATIVE. WHILE HOLDING SO THE HONBLE ALLAHABAD HIGH COUR T HAS ADOPTED THE DISCUSSIONS AND GUIDELINES NARRATED BY THE H ONBLE SUPREME COURT IN THE CASE OF CIT VS. RAJA BENOY KUMAR SAHAS ROY [32 ITR 466 (SC)]. 5.1. IN THE WRITTEN SUBMISSION THE ASSESSEE HAS SUBMITTE D THAT HE IS THE OWNER OF A PLOT OF ABOUT 1 ACRE OF LAND IN WHICH AGRICULTUR AL ACTIVITY I.E. TILLING OF LAND MIXING OF COW DANG AND OTHER MANURES MAKING OF SH EDS SAWING OF SEEDS WATERING WEEDING DIGGING THE SOIL AROUND THE GROWTH SPRAYING OF CHEMICALS ETC. ARE CARRIED ON FOR CULTIVATION OF TEA SEEDLINGS WHICH CONSTITUTE INTEGRAL PART OF AGRICULTURAL OPERATION. THESE ACTIVITIES ARE ALSO CARRIED ON BY THE ASSESEE IN PURSUANCE OF HIS OPERATING A NURSERY AS STATED ABOVE. THEREAFTER THESE PLANTS ARE SOLD TO THE LOCAL BUSINESSMEN WHO PUT THEM IN POLY PACKS (SMALL PLASTIC CONTAINER) AND SELL THEM TO DIFFERENT PARTIES. THIS FACT WAS EXPLAINED TO THE A.O. VIDE HIS LETTER DATED 9/9/20 02. WE FIND NO 4 MENTION IN THE ORDERS OF THE AUTHORITIES BELOW DISCARDING T HE ABOVE FACTUAL POSITION. IT IS FURTHER PERTINENT TO MENTION HERE THAT NO GROWTH OF PLANT IS POSSIBLE WITHOUT TILLING OF LAND TURNING OVER THE EARTH FOR K ILLING INSECTS WATERING MANURING SPRAYING AND FIXING THEM IN THE EARTH. ONLY WHEN PLANTS ARE ESTABLISHED IN SOIL THEY ARE SOLD TO THE LOCAL BUSINESSM EN WHO PUT THEM IN POLY PACKS AND SELL THEM TO DIFFERENT PARTIES. ON THE A BOVE FACTS IT IS FOUND THAT THE ASSESSEE IS NOT DOING ANY TRADING IN PLANTS BUT IS DEVELOPING AND GROWING PLANTS FROM ITS BIRTH TO ITS POINT OF SALE. THEREFORE THE ASSESSEE IS CARRYING ON AGRICULTURAL ACTIVITIES AND THE INCOME IS AGRICULTURAL INCOME . 5.2. THE CONDITIONS PRECEDENT FOR ATTRACTING THE PROVISION OF SEC. 2(1A)(A) OF I.T. ACT 1961 ARE THAT (I) RENT OR REVENUE WHICH IS DIRECT LY DERIVED FROM ANY LAND WHICH IS USED FOR AGRICULTURAL PURPOSES WILL BE AGRICULTUR AL INCOME; (II) REVENUE WHICH IS DERIVED MUST ALSO BE DIRECTLY AND NOT IN DIRECTLY ASSOCIATED WITH THE LAND WHICH IS USED FOR AGRICULTURAL PURPOSES BEFORE IT CAN BE SAID TO BE AGRICULTURAL INCOME; AND (III) THE EFFECTIVE SOURCE OF RECEIPTS BEING FROM LAN D IS THE DECISIVE FACTOR. THUS IT IS SETTLED THAT AGRICULTURAL INCOME IS DERIVED FROM THE PRODUCE OF THE LAND WHICH ARE SOMETHING SALEABLE EITHER FOR CONSUMPTION OR FOR TRADE OR COMMERCE IF THERE IS SOME SU BSTANCE AVAILABLE FROM THE PLANTS WHICH CONSTITUTE AGRICULTURAL PRODUCE. IN T HE CASE OF CIT VS. RAJA BENOY KUMAR SAHAS ROY (SUPRA) IT HAS BEEN HELD T HAT AGRICULTURE CONSISTED OF THE EXPRESSIONS AGAR I.E. LAND AND CULTURE I.E. CULTIVATION WHICH MEANS CULTIVATION OF FIELD I.E. TILLING OF LAND MANURING & SPR AYING CHEMICALS SOWING OF SEEDS WATERING ETC. THERE ARE ALSO SO ME SUBSEQUENT OPERATIONS REQUIRED TO BE CARRIED OUT FOR GROWING PLANTS ON THE CULTIVATED LAND. FURTHER FOR DETERMINING INCOME FROM AGRICULTURE THERE MUST BE A NEXUS BETWEEN INCOME FROM LAND AND AGRICULTURAL OPERATIONS . INCOME TREATED AS AGRICULTURAL INCOME SHOULD BE DERIVED FROM LAND AND THE LAND SHOULD BE USED FOR AGRICULTURAL OPERATION. IN THE CASE OF THE ASSE SSEE AS WE FIND FROM THE FACTS FOUND ON RECORD HE HAS 1 ACRE OF LAND IN WHICH AFTER MEETING NECESSARY PROCEDURES HE PRODUCES TEA SEEDLINGS. THERE FORE THE CRITERIA IS NOT THE TEA SEEDLINGS BUT IT IS ANY PLANT OR SEED BEING CULTIVA TED AND GROWN ON SUCH AGRICULTURAL LAND. 5 5.3. THE ASSESSEE RELIED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SOUNDARYA NURSERY (SUPRA) WHEREIN THE QUESTION BEFORE THE HONBLE COURT WAS AS TO WHETHER THE INCOME FROM SALE OF PLANTS GROWN DIRECTLY IN THE POTS AND THE SALE OF SEEDS CAN BE TREATED AS AG RICULTURAL INCOME WITHIN THE MEANING OF SEC. 2(1) OF THE I.T. ACT 1961. IN THE SAID DECISION THE HONBLE MADRAS HIGH COURT HAS DISCUSSED SEVERAL GUIDELINES FOR TRE ATING THE ACTIVITIES AS AGRICULTURAL OR OTHERWISE. THE FACTS OF THAT CASE AND FIN DING OF THE HONBLE COURT ARE GIVEN BELOW :- 4. THE TRIBUNAL AFTER CONSIDERING ALL THE RELEVAN T FACTS AS ALSO THE APPLICABLE LAW CONCLUDED THAT THE ASSESSEES ACTIVITIES ARE T O PREPARE SEEDLINGS ON SCIENTIFIC LINES; THAT THE MOTHER PLANTS ARE GROWN ON PREPARED BEDS ON LANDS OWNED BY IT AND THE PLANTS ARE THEN GRAFTED OR BUDD ED; THAT THE RESULTING GRAFTS ARE TRANSPLANTED IN SUITABLE CONTAINERS AND ARE REARED IN GROSS HOUSES OR IN SHADE AND AFTER THEY TAKE ROOT THEY ARE TRAN SMITTED TO LARGE CONTAINERS FILLED WITH TOP SOIL AND MANURE ETC. TILL THEY EST ABLISH THEMSELVES; AND THEREAFTER THOSE PLANTS ARE SOLD AND THAT THE PRIMA RY SOURCE OF THE PLANT IS THE MOTHER PLANT WHICH IS REARED ON EARTH AND FOR WHIC H ACTIVITIES CERTAINLY CONTRIBUTION OF HUMAN LABOUR AND ENERGY ARE ESSENTI AL. 5. LEARNED COUNSEL FOR THE REVENUE CONTENDED BEFORE US THAT THE PLANTS ARE ONLY GROWN IN POTS AND NO MATTER THE PERIOD FOR WHI CH THEY ARE SO GROWN THAT ACTIVITY CAN NEVER BE REGARDED AS AGRICULTURAL OPER ATIONS. IN SUPPORT OF THAT SUBMISSION COUNSEL REFERRED TO THE DECISION OF ALL AHABAD HIGH COURT IN H H MAHARAJA VIBHUTI NARAIN SINGH VS. STATE OF U.P. (19 67) 65 ITR 364 (ALL) WHEREIN THE COURT MADE AN OBSERVATION WHICH WAS CLEA RLY OBITER THAT AGRICULTURE CANNOT BE CARRIED ON IN POTS AS IN THA T CASE A LARGE NUMBER OF COCONUT PLANTS WERE NURTURED ON LAND IN THE NURSERY . 6. OUR ATTENTION WAS THEN INVITED BY LEARNED COUNSE L TO THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS. RAJA BENOY KUM AR SAHAS ROY (1957) 32 ITR 466 (SC) : TC 31R.304 WHICH IS THE LEADING CAS E ON AGRICULTURE. IT WAS HELD THEREIN THAT AGRICULTURE IN ITS PRIMARY SENSE DENOTES THE CULTIVATION OF THE FIELD AND IS RESTRICTED TO CULTIVATION OF THE LAND IN THE STRICT SENSE OF THE TERM MEANING THEREBY TILLING OF THE LAND SOWING OF THE SEEDS PLANTING AND SIMILAR OPERATIONS ON THE LAND AND THESE ARE BASIC OPERATIO NS WHICH REQUIRE THE EXPENDITURE OF HUMAN SKILL AND LABOUR UPON THE LAND ITSELF. THE APEX COURT FURTHER HELD THAT BESIDES THE BASIS OPERATIONS THE SUBSEQUENT OPERATIONS WOULD ALSO BE COMPREHENDED WITHIN THE TERMS OF AGRI CULTURE AND SUCH SUBSEQUENT OPERATIONS ARE ILLUSTRATED AS WEEDING DI GGING THE SOIL AROUND THE GROWTH REMOVAL OF UNDESIRABLE UNDERGROWTH AND ALL OPERATIONS WHICH FOSTER THE GROWTH AND PRESERVATION OF THE SAME NOT ONLY FR OM INSECTS AND PETS BUT ALSO FROM DEPREDATION FROM OUTSIDE TENDING PRUNING CUTTING HARVESTING AND RENDERING THE PRODUCE FIT FOR THE MARKET WHICH WOU LD ALL BE AGRICULTURAL OPERATIONS WHEN TAKEN IN CONJUNCTION WITH THE BASI C OPERATIONS. 7. ALL THE PRODUCTS OF THE LAND WHICH HAVE SOME UT ILITY EITHER FOR CONSUMPTION OR FOR TRADE OR COMMERCE IF THEY ARE BASED ON LAND WOULD BE AGRICULTURAL PRODUCTS. HERE IT IS NOT THE CASE OF THE REVENUE T HAT WITHOUT PERFORMING THE BASIC OPERATIONS ONLY THE SUBSEQUENT OPERATIONS A S DESCRIBED IN THE DECISION 6 OF THE APEX COURT HAVE BEEN PERFORMED BY THE ASSESS EE. IF THE PLANTS SOLD BY THE ASSESSEE IN POTS WERE THE RESULT OF THE BASIC O PERATIONS ON THE LAND ON EXPENDING HUMAN SKILL AND LABOUR THEREON AND IT IS ONLY AFTER THE PERFORMANCE OF THE BASIC OPERATIONS ON THE LAND THE RESULTANT PRODUCT GROWN OR SUCH PART THEREOF AS WAS SUITABLE FOR BEING NURTURED IN A POT WAS SEPARATED AND PLACED IN A POT AND NURTURED WITH WATER AND BY PLACING THE M IN THE GREEN HOUSE OR IN SHADE AND AFTER PERFORMING SEVERAL OPERATIONS SUCH AS WEEDING WATERING MANURING ETC. THEY ARE MADE READY FOR SALE AS PLAN TS; ALL THESE OPERATIONS WOULD BE AGRICULTURAL OPERATIONS. ALL THIS INVOLVES HUMAN SKILL AND EFFORTS. THUS THE PLANTS SOLD BY THE ASSESSEE IN POTS WERE THE RESULT OF PRIMARY AS WELL AS SUBSEQUENT OPERATIONS COMPREHENDED WITHIN T HE TERM AGRICULTURE AND THE ARE CLEARLY THE PRODUCTS OF AGRICULTURE. 8. SO FAR AS THE SEEDS ARE CONCERNED WE ARE SURPRI SED THAT THAT QUESTION SHOULD HAVE BEEN RAISED AT ALL BY THE REVENUE AS I T IS NOT POSSIBLE FOR THE SEEDS TO EXIST WITHOUT THE MOTHER PLANTS AND THE M OTHER PLANT IT IS NOBODYS CASE WAS NOT GROWN ON LAND. IT IS ALSO NOT THE CAS E OF THE REVENUE THAT THE SEEDS WERE THE RESULT OF THE WILD GROWTH AND NOT ON ACCOUNT OF CULTIVATION BY THE ASSESSEE. THE SEEDS WERE CLEARLY A PRODUCT OF A GRICULTURE AND THE INCOME DERIVED FROM THE SALE OF SEEDS WAS AGRICULTURAL IN COME . [EMPHASIS SUPPLIED] THEREFORE IN THE CASE OF SOUNDARY NURSERY (SUPRA) IT HAS BEEN CATEGORICALLY HELD THAT WHEN PLANTS SOWN IN POTS WERE THE RESULT OF CO NTINUATION OF BASIC OPERATIONS ON THE LAND REQUIRING EXPENDITURE ON HUMAN S KILL AND LABOUR THEREON AND AFTER PERFORMANCE OF THE BASIC OPERATIONS ON LAND THE RESULTANT PRODUCT OR PART THEREOF WAS SUITABLE FOR NURTURING IN A P LACE UNDER SHELTER OR BY ACCOMMODATING THEM IN A GREENHOUSE OR IN A SHED AFTE R PERFORMING SEVERAL OPERATIONS SUCH AS WEEDING WATERING MANURING ETC. AND AR E MADE READY FOR SALE THEREBY THESE OPERATIONS ARE AGRICULTURAL OPERATIONS AND THE PLANTS ARE PRODUCTS OF AGRICULTURE THE INCOME DERIVED FROM SUCH AGR ICULTURAL PRODUCTS IS ONLY ASSESSABLE AS AGRICULTURAL INCOME. IT IS PERTINENT TO MENTION HERE THAT HONBLE MADRAS HIGH COURT WHILE DECIDING THE CASE OF CIT V S. SOUNDARY NURSERY (SUPRA) APPLIED THE RATIO OF HONBLE SUPREME COUR T DECISION IN THE CASE OF CIT VS. RAJA BENOY KUMAR SAHAS ROY (SUPRA) AND HELD OBITER THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF H.H.MA HARAJA VIBHUTI NARAIN SINGH VS. STATE OF UP (SUPRA) RELIED ON BY THE AUTHO RITIES BELOW. IN THIS VIEW OF THE MATTER THE DECISION RELIED UPON BY THE AU THORITIES BELOW IN SUPPORT OF THEIR CASE THAT TEA SEEDLINGS ARE NOT AGRICULT URAL OPERATION IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE. 5.4. IN THIS CONNECTION WE MAY FURTHER REFER TO THE DEC ISION OF HONBLE UTTARKHAND HIGH COURT IN THE CASE OF CIT VS. GREEN GOLD TREE FARMERS (P) 7 LTD. [(2008) 299 ITR 162] WHEREIN THE ASSESSEE WAS CARRYIN G ON ACTIVITIES OF RUNNING A NURSERY AND OFFERING EXTENSION SERVICES TO FARME RS AND DERIVED INCOME THEREFROM. THE HONBLE HIGH COURT APPLYING THE R ATIO OF DECISIONS IN THE CASES OF RAJA MUSTAFA ALI KHAN VS. CIT [16 ITR 330 (P C)] CIT VS. RAJA BENOY KUMAR SAHAS ROY [32 ITR 466 (SC)] AND S.S.RAJA LINGA RAJA VS. STATE OF MADRAS [AIR 1767 SC 814] HELD THAT THE SALE PROCEEDS OF PLANTS RAISED IN NURSERY ON LAND BELONGING TO THE ASSESSEE CONSTITUTES INCOME FROM A GRICULTURE ELIGIBLE FOR EXEMPTION U/S. 10(1) OF THE ACT. THE OBSERVATION OF HONBLE HIGH COURT IS AS UNDER :- FROM PERUSAL OF BOTH THE CLS. (A) AND (B) OF S. 2(1A) IT IS CLEAR THAT AGRICULTURAL INCOME MUST BE DERIVED FROM LAND WHICH IS USED FOR AGRICULTURAL PURPOSES. THE TERMS AGRICULTURE AND AGRICULTURAL PURPOSES NOT HAVING BEEN DEFINED IN THE INDIAN IT A CT BUT NECESSARILY FALL BACK UPON THE GENERAL SENSE IN WHICH THEY HAVE BE EN UNDERSTOOD IN COMMON PARLANCE. AGRICULTURE IN ITS ROOT SENSE MEAN S A GEAR A FIELD AND CULTIVATE; CULTIVATION OF FIELD WHICH IS COURSE IM PLIES EXPENDITURE OF HUMAN SKILL AND LABOUR UPON LAND. THEREFORE ON THE F ACTS OF THE CASE THE SALE PROCEEDS OF THE PLANTS RAISED IN THE NURSER Y ON THE LAND BELONGING TO THE ASSESSEE CONSTITUTE INCOME FROM AGRI CULTURE HENCE EXEMPT FROM TAX UNDER I.T. ACT. THE ASSESSEE HAS FILED PAPER SHEET DETAILING THEREIN THE B ASIC OPERATIONS BEING CARRIED OUT BY HIM AND SUBSEQUENT OPERATIONS FOR WHICH E XPENDITURE TO THE TUNE OF RS.45 000/- HAD BEEN INCURRED. FROM THE ASSESS MENT ORDER WE DO NOT FIND ANY MENTION ABOUT DISALLOWING AND QUESTIONING NECES SITY OF INCURRING SUCH EXPENDITURE. IT IS FURTHER MENTIONED THAT ALL THROUGH FROM ASSESSMENT YEAR 1998-99 TILL A.Y. 2003-04 EXCEPTING THE ASSESSMENT YEAR UNDER APPEAL I.E. A.Y. 2000-01 INCOME SHOWN BY THE ASSESSEE HAS BEEN ACCEPTED BY THE DEPARTMENT AS AGRICULTURAL INCOME. THE DEPARTMENT COULD NOT BRING ON RECORD ANY MATERIAL TO ESTABLISH THAT THE NATURE OF LAND AND OPERA TIONS CARRIED ON BY THE ASSESSEE ON SUCH LAND WERE DIFFERENT THAN TH OSE OF EARLIER AS WELL AS SUBSEQUENT ASSESSMENT YEARS. IN THAT VIEW ALSO WE DO NOT FIND ANY JUSTIFIABLE REASON TO DEVIATE FROM THE ACCEPTED POSITION. 5.5. THEREFORE CONSIDERING THE TOTALITY OF THE FACTS AND C IRCUMSTANCES OF THE CASE AND CASE LAOWS DISCUSSED ABOVE INCLUDING THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SOUNDARYA NUR SERY (SUPRA) WE HOLD THAT TEA SEEDLING IS A PART OF AGRICULTURAL OPERATION AND T HE INCOME DERIVED 8 FROM SALE OF SUCH SEEDLINGS IS AGRICULTURAL INCOME AND NOT BU SINESS INCOME AS HELD BY THE AUTHORITIES BELOW. WE THEREFORE DELETE THE AD DITION OF RS.55 000/- MADE TO THE TOTAL INCOME OF THE ASSESSEE AS BUSINESS INC OME. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED IN THE COURT ON 7.5.10. SD/- SD/- [D.K.TYAGI] [B.C. MEENA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 7-05-2010 COPY FORWARDED TO : 1. SRI RAJENDRA KR. AGARWALA MERCHANT ROAD DINBAZAR JALPAIGURI-735 101 2. I.T.O. WARD-2(1) JALPAIGURI 3. C.I.T.(A) JALPAIGURI 4. THE C.I.T. JALPAIGURI 5. THE DEPARTMENTAL REPRESENTATIVE ITAT KOL KATA. TRUE COPY BY OR DER [DKP] DY. REGISTRAR.