Razak Rowther Mohamed Saleem Vs ITO (ITAT Chennai)
Eucalyptus Trees Grown on Own Agricultural Land = Agricultural Income – Tribunal Deletes Entire Addition
Assessee filed return declaring total income of ₹7,65,160 & agricultural income of ₹85,84,619. The return was processed u/s 143(1) & later selected for limited scrutiny to verify sales receipts, claim of agricultural income & capital gains. AO accepted that the Assessee owned agricultural land (patta, chitta & land records were produced) & that eucalyptus (Kungiliyam) and wattle (Seegai) trees were grown on the land. Even the Inspector’s field report dated 06.12.2018 confirmed the existence of eucalyptus trees. However, AO held that only planting & pruning were done & there was no evidence of other agricultural operations like tilling, manuring, irrigation, labour, fertilizers or maintenance. Relying on Supreme Court rulings in Raja Benoy Kumar Sahas Roy & Ramakrishna Deo, AO held that mere spontaneous growth is not agriculture & disallowed the entire agricultural income, treating it as income from other sources. CIT(A) confirmed the disallowance.
Before Tribunal, Assessee argued that agricultural income includes any revenue derived from land used for agricultural purposes u/s 2(1A), and sale of trees grown on own land is agricultural income. It was submitted that all basic & subsequent agricultural operations were carried out, including planting techniques, spacing, irrigation, pruning, processing & sale of produce as per District Collector’s permission. The Assessee demonstrated that eucalyptus is an agricultural crop grown on dry (punjai) land & the Inspector himself confirmed cultivation but only noted lack of visible maintenance, which does not negate agriculture.
