The ITO, Ward-3(3)(1),, Ahmedabad v. Shri Ashish Ambalal Patel,, Ahmedabad

ITA 3512/AHD/2015 | 2012-2013
Pronouncement Date: 30-11-2017 | Result: Dismissed

Appeal Details

RSA Number 351220514 RSA 2015
Assessee PAN AMLPP5430A
Bench Ahmedabad
Appeal Number ITA 3512/AHD/2015
Duration Of Justice 1 year(s) 11 month(s) 15 day(s)
Appellant The ITO, Ward-3(3)(1),, Ahmedabad
Respondent Shri Ashish Ambalal Patel,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Department
Tags covered matter
Order Result Dismissed
Bench Allotted Not Allotted
Tribunal Order Date 30-11-2017
Assessment Year 2012-2013
Appeal Filed On 15-12-2015
Judgment Text
SMC-ITA NO. 3512/AHD/2015 ITO VS. ASHISH AMBALAL PATEL ASSESSMENT YEAR: 2012-13 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH AHMEDABAD [ BEFORE SHRI PRAMOD KUMAR ACCOUNTANT MEMBER ] ITA NO. 3512/AHD/2015 ASSESSMENT YEAR : 2012-13 INCOME TAX OFFICER ............APPELLANT WARD 3(3)(1) AHMEDABAD VS. ASHISH AMBALAL PATEL .......................RESPONDENT 9 DEVANSH BUNGALOW NR. SURDHARA CIRCLE THALTEJ AHMEDABAD [PAN : AMLPP 5430 A] APPEARANCES BY: SANTOSH KARNANI FOR THE APPELLANT BK PATEL FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 20.11.2017 DATE OF PRONOUNCING THE ORDER : 30.11.2017 O R D E R 1. BY WAY OF THIS APPEAL THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF ORDER DATED 7 TH OCTOBER 2015 PASSED BY THE CIT(A)-3 AHMEDABAD IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) THE INCOME-TAX ACT 1961 FOR THE ASSESSMENT YEAR 2012-13. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOW S:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.33 00 000/- MADE BY THE AO BY TREATING THE IN COME OF THE ASSESSEE AS BUSINESS INCOME INSTEAD OF AGRICULTURE INCOME AS DECLARED BY THE ASSESSEE. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT APPLYING THE RATIO LAID DOWN BY THE HONBLE ITAT DELHI BENCH IN THE C ASE OF PRO ARO SEEDS COMPANY LTD. VS. JOINT COMMISSIONER OF INCOME TAX [ 2003] 126 TAXMAN 37 (DELHI) (MAG) 3. BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME BUT THEN AS OPINED BY THE ASS ESSING OFFICER THE ASSESSEE WAS SMC-ITA NO. 3512/AHD/2015 ITO VS. ASHISH AMBALAL PATEL ASSESSMENT YEAR: 2012-13 PAGE 2 OF 7 ENGAGED IN THE ACTIVITY OF GROWING RAISING AND DEV ELOPING HIGH GERMINATION SEED WHICH WAS A HIGHLY TECHNICAL AND RESEARCH BASED ACT IVITY. IT WAS IN THIS BACKDROP AND RELYING UPON THE STAND OF HIS PREDECESSOR THE ASSESSING OFFICER TREATED THE SAID INCOME AS BUSINESS INCOME. IN COMING TO THIS CONCL USION THE ASSESSING OFFICER WAS PARTICULARLY SWAYED BY A DECISION OF THIS TRIBUNAL IN THE CASE OF PRO AGRO SEEDS CO. LTD VS. JCIT [(2003) 126 TAXMAN 37 (DEL)]. AGGRIEV ED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO REVERSED THE ACTION OF THE ASSESSING OFFICER AND HELD THAT THE ASSESSEES INCOME FROM CULTIVATION OF HYBRID SEEDS HAS ALL THE BASIC AGRICULTURAL OPERATIONS AND IS ACCORDINGLY REQUI RED TO BE TREATED AS AGRICULTURAL INCOME. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE ME. 4. I HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLIC ABLE LEGAL POSITION. 5. I HAVE NOTED THAT ADMITTEDLY THE ASSESSEE IS ENG AGED IN GROWING HYBRID SEEDS WHICH REQUIRES NORMAL AGRICULTURAL OPERATIONS WITH EXTENDED CARE FOR ROUGHING GRADING ISOLATION ETC. AS CERTIFIED BY THE RESEARC H SCIENTIST CONCERNED. ON THESE FACTS AND AFTER DULY CONSIDERED THE IMPACT OF PRO AGRO DECISION (SUPRA) A DIVISION BENCH OF THIS TRIBUNAL IN THE CASE OF VIBHA AGRO T ECH LTD VS. ITO [(2009) 120 ITD 182 (HYD)] HAS HELD AS FOLLOWS:- 18. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND ALSO T HE CASE LAW CITED AT THE BAR. SECTION 2(1A) OF THE INCOME TAX ACT 1961 DEFI NES AGRICULTURAL INCOME. THE RELEVANT PART OF THE DEFINITION READS THUS: (1A) 'AGRICULTURAL INCOME' MEANS (A) ANY RENT OR REVENUE DERIVED FROM LAND WHICH IS SITUATED IN INDIA AND IS USED FOR AGRICULTURAL PURPOSES. (B) ANY INCOME DERIVED FROM SUCH LAND BY (I) AGRICULTURE; OR (II) THE PERFORMANCE BY A CULTIVATOR OR RECEIVER OF RENT-IN-KIND OF ANY PROCESS ORDINARILY EMPLOYED BY A CULTIVATOR OR RECE IVER OF RENT-IN-KIND TO RENDER THE PRODUCE RAISED OR RECEIVED BY HIM FIT TO BE TAKEN TO MARKET OR (III) THE SALE BY A CULTIVATOR OR RECEIVER OF RENT- IN-KIND OF THE PRODUCE RAISED OR RECEIVED BY HIM IN RESPECT OF WHICH NO PROCESS HAS BEEN PERFORMED OTHER THAN A PROCESS OF THE NATURE DESCRIBED IN PAR AGRAPH (II)OF THIS SUB-CLAUSE; FROM A CAREFUL PERUSAL OF SECTION 2(1A)(A) IT IS A PPARENT THAT THERE ARE THREE REQUISITE CONDITIONS FOR ATTRACTING APPLICATION OF THE SUB CLAUSE VIZ. : (I) RENT OR REVENUE SHOULD BE DERIVED FROM LAND; (II) THE LAND SHOULD BE SITUATED IN INDIA; AND (III) THE LAND SHOULD HAVE BEEN USED FOR AGRICULTUR AL PURPOSES. SMC-ITA NO. 3512/AHD/2015 ITO VS. ASHISH AMBALAL PATEL ASSESSMENT YEAR: 2012-13 PAGE 3 OF 7 IN ORDER TO CONSTITUTE AGRICULTURAL INCOME UNDER S ECTION 2(1A)(B) OF THE 1961 ACT TWO CONDITIONS HAVE TO BE SATISFIED VIZ. (I) THE LAND MUST BE USED FOR GROWING ALL OR ANY OF THE COMMERCIAL CROPS AND (II ) THAT THE INCOME SHOULD BE DERIVED FROM SUCH LAND BY AGRICULTURE VIDE CONSOLID ATED COFFEE ESTATES (1943) LTD. V. COMMR. OF AGRL. IT . 19. BEFORE PROCEEDING FURTHER IT IS APT TO CONSIDE R THE TWO DECISIONS RELIED ON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE WHICH AR E AS UNDER. 20. IN ASPTNWALL AND CO. LTD. V. CIT (SUPRA) THE Q UESTION WAS AS TO WHETHER THE TRIBUNAL IS RIGHT IN LAW AND FACTS IN HOLDING T HAT THE ASSESSEE'S ACTIVITY OF CURING COFFEE AMOUNTS TO MANUFACTURING AND THE ASSE SSEE IS ENTITLED TO RELIEF UNDER SECTION 32A OF THE INCOME TAX ACT ? IT HAS BE EN HELD BY THE HON'BLE SUPREME COURT THAT CONVERSION OF THE RAW BERRY INTO COFFEE BEANS WAS A MANUFACTURING ACTIVITY. THE ASSESSEE WAS THEREFORE ENTITLED TO INVESTMENT ALLOWANCE UNDER SECTION 32A. 21. IN CIT V. ABDUL AHAD NAJAR (SUPRA) THE ASSESSE E A LESSEE WAS ENGAGED IN THE BUSINESS OF FOREST EXPLOITATION. THE ASSESSE E CLAIMED DEDUCTION UNDER SECTION 80J FOR THE ASSESSMENT YEAR 1995-96. THE ASSESSING OFFICER HELD THAT THE PROCESS OF CONVERTING TREES INTO LOGS DID NOT INVOLVE ANY MANUFACTURING PROCESS AND HENCE NEGATIVED THE ASSES SEE'S CLAIM. THE TRIBUNAL UPHELD THE CLAIM OF THE- ASSESSEE. ON A RE FERENCE IT HAS BEEN HELD BY THEIR LORDSHIPS THAT THE ACTIVITY OF THE FOREST LESSEES OF EXTRACTION OF TIMBER FROM THE FOREST AND CONVERSION OF THE SAME INTO LOG S AND PLANKS WAS A MANUFACTURING PROCESS AND HENCE THE ASSESSEE WAS EL IGIBLE FOR DEDUCTION UNDER SECTION 80J. 22. BOTH THE DECISIONS RELIED ON BY THE LEARNED DEP ARTMENTAL REPRESENTATIVE ARE ON DIFFERENT PROVISIONS OF THE ACT AND NOT ON T HE IMPUGNED ISSUE AT ALL THEREFORE THE DECISIONS THEREIN CANNOT DETERMINE T HE COURSE OF DECISION MAKING IN THE INSTANT CASE HENCE NOT APPLICABLE. 23. THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. RAJA BENOY KUMAR SAHAS ROY HAS CONSIDERED THE TERM 'AGRICULTURE' A ND HELD AT P. 466 (HEADNOTES) AS UNDER: 'AGRICULTURE' IN ITS PRIMARY SENSE DENOTES THE CULT IVATION OF THE FIELD AND IS RESTRICTED TO CULTIVATION OF THE LAND IN THE STR ICT SENSE OF THE TERM MEANING THEREBY TILLING OF THE LAND SOWING OF THE SEEDS PLANTING AND SIMILAR OPERATIONS ON THE LAND. THESE ARE BASIC OPE RATIONS AND REQUIRE THE EXPENDITURE OF HUMAN SKILL AND LABOUR UPON THE LAND ITSELF. THOSE OPERATIONS WHICH THE AGRICULTURIST HAS TO RES ORT TO AND WHICH ARE ABSOLUTELY NECESSARY FOR THE PURPOSE OF EFFECTIVELY RAISING PRODUCE FROM THE LAND OPERATIONS WHICH ARE TO BE PERFORMED AFTE R THE PRODUCE SPROUTS FROM THE LAND E.G. WEEDING DIGGING THE S OIL AROUND THE GROWTH REMOVAL OF UNDESIRABLE UNDERGROWTH AND ALL OPERATIONS WHICH FOSTER THE GROWTH AND PRESERVATION OF THE SAME NOT ONLY FROM INSECTS SMC-ITA NO. 3512/AHD/2015 ITO VS. ASHISH AMBALAL PATEL ASSESSMENT YEAR: 2012-13 PAGE 4 OF 7 AND PESTS BUT ALSO FROM DEGRADATION FROM OUTSIDE T ENDING PRUNING CUTTING HARVESTING AND RENDERING THE PRODUCE FIT F OR THE MARKET WOULD ALL BE AGRICULTURAL OPERATIONS WHEN TAKEN IN CONJUN CTION WITH THE BASIC OPERATIONS' 24. IN K. LAKSHMANAN & CO. AND ORS. V. CIT IT HAS BEEN HELD AT (HEADNOTES) AS UNDER: HELD DISMISSING THE APPEALS THAT HAD THE MULBERRY LEAVES BEEN SUBJECTED TO SOME PROCESS AND SOLD IN THE MARKET AS SUCH THEN CERTAINLY THE INCOME DERIVED THEREFROM WOULD BE REG ARDED AS AGRICULTURAL INCOME BUT THE CASE OF THE ASSESSEE B EFORE THE AUTHORITIES AND IN THE SUPREME COURT HAD BEEN THA T MULBERRY LEAVES COULD NOT BE SOLD IN THE MARKET AND THEY COULD ONLY BE FED TO THE SILK WORMS. THE AGRICULTURAL PRODUCE OF THE CULTIVATOR W OULD BE MULBERRY LEAVES AND BY NO STRETCH OF IMAGINATION COULD THE S ILK WORMS AND CERTAINLY NOT THE SILK COCOONS BE REGARDED AS THE AGRICULTURAL PRODUCE OF THE CULTIVATOR. THE INCOME DERIVED BY THE ASSESS EE FROM THE SALE OF THE COCOONS COULD NOT IN LAW BE REGARDED AS AGRICUL TURAL INCOME. 25. IN CIT V. SOUNDARYA NURSERY IT HAS BEEN HELD AT P. 533 THAT: .THUS THE PLANTS SOLD BY THE ASSESSEE IN POTS WE RE THE RESULT OF PRIMARY AS WELL AS SUBSEQUENT OPERATIONS COMPREHEND ED WITHIN TERM 'AGRICULTURE' AND THEY ARE CLEARLY THE PRODUCTS OF 'AGRICULTURE'. IT HAS BEEN FURTHER HELD THAT 'THE SEEDS WERE CLEAR LY A PRODUCT OF AGRICULTURE AND THE INCOME DERIVED FROM THE SALE OF SEEDS WAS AGRICULTURAL INCOME.' 26. IN PROGO SEEDS CO. LTD. V. JT CIT AND VICE VERS A IN ITA NOS.90/D/2000 4899/D/97 AND CO. NO. 53/D/2000 VIDE ORDER DATED 1 1-11-2002 FOR THE ASSESSMENT YEARS 1996-97 AND 1994-95 THE ASSESSEE COMPANY WAS ENGAGED IN GROWING VARIOUS KINDS OF HYBRID SEEDS AN D EARNING INCOME FROM THEIR SALE. THE INCOME FROM SALE OF SEEDS WAS CLAIM ED AS EXEMPT UNDER SECTION 10(1) OF THE INCOME TAX ACT. DURING T HE COURSE OF ASSESSMENT IT WAS FOUND THAT THE SALE OF SEEDS WAS OF TWO KIND S I.E. SALE OF PARENT SEEDS AND THE SALE OF FOUNDATION SEEDS ALSO CALLED COMMER CIAL SEEDS AND HYBRID SEEDS. IN TERMS OF MONEY THE ASSESSEE HAD SHOWN THE SALE OF PARENT SEEDS AT RS. 16 19 854 SALE OF HYBRID SEEDS AT RS. 54 21 23 398 AND SALE OF DISCARDED SEEDS AT RS. 38 52 866. IT WAS FURTHER OBSERVED BY THE ASSESSING OFFICER THAT THE TOTAL SALE INCLUDES SALE OF PARENT SEEDS AMOUNT ING TO RS. 16 19 854 TO M/S. HYBRID RICE INTERNATIONAL (P) LTD. AND THERE W AS ANOTHER SALE IN RESPECT OF GERM PLASM SEEDS OF PADDY FOR AN AMOUNT OF RS. 6 95 00 000 TO THE SAME PARTY. THE REMAINING SALE PERTAINED TO COMMERCIAL H YBRID SEEDS. THE ASSESSING OFFICER AFTER DETAILED DISCUSSION TREATED THE RECEIPT OF RS. 6.95 CRORES PERTAINING TO THE SALE OF GERM PLASM SEEDS A S NON-AGRICULTURAL RECEIPT AND BROUGHT THE SAME TO TAX. ON APPEAL THE LEARNED COMMISSIONER (APPEALS) AFTER REJECTING THE STAND OF THE ASSESSEE APPROVED ULTIMATELY THE VIEW TAKEN SMC-ITA NO. 3512/AHD/2015 ITO VS. ASHISH AMBALAL PATEL ASSESSMENT YEAR: 2012-13 PAGE 5 OF 7 BY THE ASSESSING OFFICER TO TREAT THE INCOME OF RS. 6.95 CRORES AS NON- AGRICULTURE. ON FURTHER APPEAL TO TRIBUNAL THE TRI BUNAL WHILE CONFIRMING THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) HELD VI DE PARAS 38 AND 39 OF ITS ORDER AS UNDER: 38. NO DOUBT THERE HAVE BEEN TECHNOLOGICAL SCIENTI FIC ADVANCES OVER THE YEARS BUT IN EXEMPTING FROM TAX AGRICULTURAL I NCOME WHAT HAS BEEN KEPT IN MIND AND CONTEMPLATED IS THAT INCOME WHICH ARISES FROM THE USE OF LAND FOR AGRICULTURAL PURPOSES BY CONVENTION AL METHODS. SECTION 2(1A) HAS DEFINED THE TERM 'AGRICULTURAL INCOME' AN D IT MUST BE EMPHASIZED THAT REFERENCE IS TO A 'CULTIVATOR' PRO DUCE WHICH IS 'FIT TO BE TAKEN TO MARKET' THE SALE IS A OF A 'PRODUCE RAISE D OR RECEIVED' BY A CULTIVATOR AND IN RESPECT OF WHICH 'NO PROCESS HAS BEEN PERFORMED OTHER THAN A PROCESS OF THE NATURE DESCRIBED IN PAR A (II) OF SUB-CLAUSE 2(IIA)(B)(II)'. SUB-CL. (II) TALKS OF 'ANY PROCESS ORDINARILY EMPLOYED BY A CULTIVATOR OR RECEIVER OF RENT-IN-KIND TO RENDER TH E PRODUCE RAISED OR RECEIVED BY HIM FIT TO BE TAKEN TO MARKET'. IN THE PRESENT CASE WE ARE TALKING OF HYBRID SEEDS/GERMPLASM SEEDS THE PRODUC TION OF WHICH HAS COME ABOUT AS A RESULT OF A HUGE EXPENDITURE RUNNIN G INTO CRORES OF RUPEES INCLUDING THAT ON RESEARCH AMOUNTING TO RS. 3.56 CRORES. CAN IT BE SAID ON THE FACTS OF THE PRESENT CASE THAT THE A SSESSEE HAS EMPLOYED CONVENTIONAL METHODS IN PRODUCING THE SEED S ? THE ANSWER IS AN EMPHATIC 'NO'. THE JUDGMENT OF THE HON'BLE SU PREME COURT IN THE CASE OF RAJA BENOY KUMAR SAHAS ROY (SUPRA) IS SQUA RELY APPLICABLE IN SPITE OF THE FACT THAT IT WAS RENDERED IN 1957 A ND WE ARE A FEW DECADES AWAY AS OF TODAY BUT NO DECISION TO THE CO NTRARY HAS BEEN BROUGHT TO OUR NOTICE ON BEHALF OF THE ASSESSEE AND SOME OF THE DECISIONS CITED ARE NOT AT ALL APPLICABLE HAVING BE EN RENDERED IN DIFFERENT CONTEXTS. 39. THE COMMISSIONER (APPEALS) IN HER ORDER HAS VER Y RIGHTLY OBSERVED THAT WHEREAS SOME PART OF THE ACTIVITIES OF THE ASS ESSEE MAY PERTAIN TO THE 'FIELD' THE MAJOR OPERATIONS ARE OF A 'MECHANI CAL NATURE' RULING OUT THE ROLE OF NATURE. IT HAS BEEN VERY APTLY EMPHASIZ ED THAT AGRICULTURE IS THE 'ART AND SCIENCE OF CULTIVATING LAND AND GROWIN G AND HARVESTING CROPS'. THESE ARE OPERATIONS LIKE WEEDING IRRIGATI NG AND TENDING. THE CROPS HOWEVER ARE LEFT TO GROW AND MATURE BY THE FORCES OF NATURE. IT IS APPARENT THAT IN THE ASSESSEE'S CASE THE INITIAL ACTIVITIES MAY BE AKIN TO AGRICULTURE BUT THE MAJOR PORTION THEREFOR IS N OT AND THEREFORE THE SALE PROCEEDS OF RS. 6.95 CRORES CANNOT BE TREATED AS AGRICULTURE INCOME. THE ACTION OF THE COMMISSIONER (APPEALS) IS CONFIRMED. 27. IN ADVANTA (INDIA) LTD. V. JT. CIT AND VICE VER SA IN ITA NOS. 512 513/HYD/2002 ITA NOS. 136 AND 236/HYD/2001 DATED 30-6-2003 FOR THE ASSESSMENT YEARS 1996-97 1998-99 AND 1997-98 THE ASSESSEE COMPANY WAS INCORPORATED ON 24-1-1994. THE MAIN OBJECT OF T HE COMPANY IS TO CARRY ON THE BUSINESS OF DEVELOPMENT PRODUCTION PROCESS ING AND SALE OF HYBRID SEEDS FOR AGRICULTURAL PURPOSES. THE REVENUE AUTHOR ITIES HAD TREATED THE ACTIVITY OF THE ASSESSEE UPTO BASIC SEEDS LEVEL AS AGRICULTURAL ACTIVITY. THE SMC-ITA NO. 3512/AHD/2015 ITO VS. ASHISH AMBALAL PATEL ASSESSMENT YEAR: 2012-13 PAGE 6 OF 7 PRODUCTION ACTIVITY FROM THE LEVEL OF BASIC SEEDS T O THE LEVEL OF HYBRID SEEDS WAS TREATED AS NON-AGRICULTURAL ACTIVITY OF THE ASS ESSEE WHICH HAS BEEN UPHELD BY THE EARNED COMMISSIONER (APPEALS). ON SEC OND APPEAL TO THE TRIBUNAL THE TRIBUNAL AFTER CONSIDERING THE VARIOU S DECISIONS INCLUDING THE DECISION OF TRIBUNAL DELHI BENCH IN PROGO SEEDS C O. LTD. (SUPRA) HAS HELD VIDE PARAS 16 AND 17 OF ITS ORDER AS UNDER: 23. IN THE CASE ON HAND BASIC SEEDS ARE GIVEN TO T HE FARMERS BY SALE OR OTHERWISE. THE FARMERS CULTIVATE THESE SEEDS AND THE HYBRID SEEDS PRODUCED BY THEM ARE SOLD BACK TO THE COMPANY AS M ANDATED BY THE CONTRACT. BUT FOR THE AGREEMENT PROHIBITING THE FA RMERS FROM SELLING THIS PRODUCE TO ANYBODY ELSE THAN THE COMPANY THERE WOU LD HAVE BEEN A MARKET BY ITSELF FOR THESE HYBRID SEEDS AS WELL AS FOR BASIC SEEDS. THE TERMS OF AGREEMENT WHICH ARE 'STRINGENT' HAVE BEEN ELABORATED IN THE LATTER PART OF THE ORDER AND IT IS THIS AGREEMENT T HAT PREVENTS THE FARMERS FROM SELLING THE HYBRID SEEDS. OUR CONCLUSI ONS AND REASONS FOR THE FINDINGS ARE SET OUT IN THE LATER PART OF THIS ORDER. ONCE THERE IS A SALE AND ALSO A PURCHASE OF A PRODUCT THEN IT CANN OT BE TERMED AS 'INTEGRAL' OR 'COMPOSITE' ACTIVITY WHICH IS INSEPA RABLE. EVEN IN A CASE WHERE IT IS HELD TO BE AN INTEGRATED ACTIVITY THE INCOME RECEIPTS COMPRISING OF BOTH AGRICULTURAL AND NON-AGRICULTURA L ELEMENTS SHOULD BE DISINTEGRATED. (SEE BOMFORD V. OSBORNE 23 TAX CASES 642 (NHL) : (1942) 10 ITR (SUPPL) 27 (HL) CIT V. MADDI AND CIT V. MAHASAMUND KISSAN CO-OPERATIVE RICE MILL & MARKETING SOCIETY L TD. ). 23. ON THE ISSUE AS TO WHETHER THE PROFIT EARNED BY THE ASSESSEE COMPANY UPTO THIS STAGE OF BASIC SEED PRODUCTION IS AGRICULTURAL INCOME OR NOT THOUGH THE REVENUE HAS ADVANCED ELAB ORATE ARGUMENTS AND ALSO FILED THE JUDGMENT OF DELHI BENCH 'D' OF T HE TRIBUNAL IN THE CASE OF PROAGRO SEEDS CO. LTD. AND ALSO FURNISHED M ATERIAL AS TO WHAT IS GENETIC ENGINEERING ETC. THE ISSUE DOES NOT AR ISE IN THESE APPEALS AS BOTH THE ASSESSING OFFICER AND THE COMMISSIONER (APPEALS) HAVE CONCURRENTLY UPHELD THE CLAIM OF THE ASSESSEE THAT THE INCOME IN QUESTION I.E. UPTO THE STAGE OF PRODUCTION OF BASI C SEEDS IS AGRICULTURAL INCOME. THUS WE REFUSE TO GIVE A FINDING ON THIS I SSUE AS THE SAME IS NOT THE SUBJECT-MATTER OF APPEAL. 24. COMING TO THE SECOND ISSUE AS TO WHETHER THE PR ODUCTION OF HYBRID SEEDS IS AGRICULTURAL PRODUCTION OF THE ASSESSEE CO MPANY OR NOT ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCE S OF THE CASE WE ARE OF THE CONSIDERED OPINION THAT THE STAND OF THE REVENUE IS CORRECT AND THE SAME HAS TO BE UPHELD. 28. APPLYING THE RATIO OF THE ABOVE DECISIONS INCLU DING THE DECISION OF THE TRIBUNAL IN PROGO SEEDS CO. LTD (SUPRA) WHEREIN T HERE WAS NO DISPUTE IN TREATING THE SALE OF PARENT SEEDS OF RS. 16 19 854 AS AN AGRICULTURAL INCOME WE FIND THAT IN THE PRESENT CASE THE UNDISPUTED FIN DINGS OF THE ASSESSING OFFICER AND LEARNED COMMISSIONER (APPEALS) ARE THAT THE BASIC SEEDS ARE PRODUCED BY THE ASSESSEE BY DOING BASIC AGRICULTURA L OPERATIONS WE ARE SMC-ITA NO. 3512/AHD/2015 ITO VS. ASHISH AMBALAL PATEL ASSESSMENT YEAR: 2012-13 PAGE 7 OF 7 CLEARLY OF THE VIEW THAT THE ASSESSEE IS DOING AGRI CULTURAL OPERATIONS AND GROWING BASIC SEEDS ON THE LANDS. IT IS NOT THE CAS E OF THE REVENUE THAT WITHOUT PERFORMING THE BASIC OPERATIONS THE SUBSEQ UENT OPERATIONS HAVE BEEN CARRIED ON BY THE ASSESSEE. IF THE BASIC SEEDS ARE SOLD BY THE ASSESSEE THE SAME IS THE RESULT OF THE BASIC OPERATIONS ON T HE LAND ON EXPENDING HUMAN SKILL AND LABOUR THEREON AND IT IS ONLY AFTER PERFORMING SEVERAL OPERATIONS SUCH AS WEEDING WATERING MANURING E TC. THE RESULTANT PRODUCT IS GROWN AND MADE READY FOR SALE IN THE FORM OF BAS IC SEEDS. THUS THE BASIC SEEDS SOLD BY THE ASSESSEE WERE THE RESULT OF PRIMA RY AS WELL AS SUBSEQUENT OPERATIONS INVOLVING HUGE SKILL AND EFFORTS AS DEFI NED UNDER SECTION 2(1A) OF THE INCOME TAX ACT AND THE SAME IS AN AGRICULTURAL INCOME AS PROVIDED UNDER SECTION 2(1A) OF THE ACT ENTITLED TO EXEMPTI ON UNDER SECTION 10(1) OF THE INCOME TAX ACT. ACCORDINGLY THE ASSESSING OFFI CER IS DIRECTED TO TREAT THE INCOME FROM BASIC SEEDS RS. 20 39 618 AS AGRICULTUR AL INCOME AND ALLOW EXEMPTION UNDER SECTION 10(1) OF THE INCOME TAX ACT . THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE ALLOWED TO THE EXTENT I NDICATED ABOVE. 6. RESPECTFULLY FOLLOWING THE ESTEEMED VIEWS OF THE DIVISION BENCH WHICH BINDS ME I UPHOLD THE ORDER OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 7. IN THE RESULT THE APPEAL IS DISMISSED. PRONOU NCED IN THE OPEN COURT TODAY ON THE 30 TH DAY OF NOVEMBER 2017. SD/- PRAMOD KUMAR (ACCOUNTANT M EMBER) AHMEDABAD 30 TH DAY OF NOVEMBER 2017 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES AHMEDABAD 1. DATE OF DICTATION: ......2 PAGES MANUSCRIPTS OF HONBLE AM ATTCHED.30.11.2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: ... 30.11.2017........ 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 30.11.2017... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 30.11.2017 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : .. 30.11.2017.... 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: