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There remains confusion among the people that this income is agriculture income or not. Professionals are also confused. But there are certain judgments and on reading them in detail we can remove our confusion for Agriculture Income.

[CIT v. Rana Gurjit Singh (2012) 340 ITR 108 75 DTR 376 (P&H)]

Seeds – Conversion of raw peas into pea seeds constitute agricultural income

Assessee is engaged in cultivating and growing raw peas and also in the process of converting them into pea seeds so as to render them fit for sale and also selling seeds in the market and to various godowns. Income derived from pea seeds constituted agricultural income. (Assessment year: 1997-98) Seeds-Crops – Constitute agricultural income

[Pioneer Overseas Corporation v. DCIT (2010) 39 DTR 273 35 SOT 467 (Delhi)]

Seeds or crops produced at first level by assessee would constitute agricultural income as per rule 7(1)(a). –

Any surplus money arising to an assessee on sale of agricultural land would partake the character of agricultural income itself.

[ITO v. Koshy George (Dr.) (2009) 317 ITR (AT) 116: (2010) 190 Taxman 4 (Mag.) (ITAT Cochin)]

On money Surplus consideration on sale of agricultural land always partakes the character of agricultural Income even though surplus consideration is tainted with expression “on money” as true colour of that “on money” is Agricultural Income. ( Assessment Year : 1999-2000) –

Tea plantation – Agricultural Income

[Wilson & Co. Ltd. v. ACIT (2009) 184 Taxman 79: 121 TTJ 258: (2008) 16 DTR 428 (ITAT Chennai)]

Income generated from tea plantation taken on lease, cannot ceased to be an Agricultural Income, on ground that basic operations had already been carried out in agricultural land by the lessor. That cultivation charges and harvesting charges incurred by assessee along with other basic operations cannot be said as towards secondary operation, so as to treat the income as Non-agricultural Income. (Related Assessment Year: 2002-03)) –

Exempt incomes – Hiring of tractors- Agricultural Income.

[CIT v. Haryana Land Reclamation Development Corporation Ltd. (2007) 200 Taxation 529 (P&H)]

The State Government Corporation whose activities were related to agricultural farms Income from hiring of tractors and combines by the corporation were held to be agricultural income as all the activities of the assessee were connected to agricultural activities and farming. ( Assessment Year: 1987-88) –

[CIT, Meerut v. Green Gold Tree Farmers (P) Ltd. – Date of Judgement 28.02.2007 (Uttarakhand High Court)]

Sale proceeds of plants raised in nursery on land belonging to the assessee constitute income from agriculture, hence éxempt from tax under Income- tax Act. –

[ACIT v. P.Z. Estate (P) Ltd. (2005) 2 SOT 563 (ITAT Delhi)]

Income derived by growing special quality of grass required for creating golf course, is agricultural income

The tests laid down by the Hon’ble Supreme Court in the case of Raja Benoy Kumar Sahas Roy, (supra), relating to agricultural operations and agricultural income are all fulfilled in this case. In CIT v. Raja Benoy Kumar Sahas Roy (1957) 32 ITR 466 wherein it was held that where trees were planted and nurtured by manual labor, the income arising there from was agricultural income and the test laid down by the Supreme Court applied to the fact of the case before them. Primary and secondary operations were performed on agricultural land in this case. Thereafter, the product of the said land i.e., specialized grass to be laid out on a golf course, was sold. The assessing officer’s finding that the growth of this specialized grass is not in the nature of agricultural activity is baseless. Apparently, the assessing officer seems to think that agricultural products must be in the nature of food products only, such as grains, vegetables or fruits. This is not correct. The correct position of law, as is spelt out in various judicial decisions, is that agricultural products would include any crop, tree, plantation or other products or produce, whether these be hemp, indigo, flax, jute, cotton, spices tobacco, coffee, tea, betel etc. In this case, the specialized grass has been grown over and over again during the year after cultivation and performing various operations on the land, as detailed by the learned Authorized Representative. All these operations were in the nature of agricultural operations. It has been held by the Hon’ble Allahabad High Court in the case of CIT v. Smt. Kaneez Umma Laila Taxation 35(1)-8, that sale proceeds of trees which were planted and nurtured by manual labor and were not spontaneous growth is agricultural income. The real test, therefore, is whether this grass was produced by spontaneous growth or by performing agricultural operations. It is amply clear from the discussion in the preceding paragraphs that agricultural operations were performed for growing this specialized grass. Keeping in view the facts and, circumstances of the case, I have no hesitation in holding that the sale of specialized grass in this case, grown on the agricultural land of the appellant – company, is agricultural income. This issue is decided in favour of the appellant-company and it is held that the income of Rs. 23,77,493 which is the net income. ( Assessment Year: 1997-98) –

Circumstance where Income is Agriculture Income and related judgements

[CIT v. D. RM. M. SP. SV A. Annamalai Chettiar (2005) 273 ITR 404: (2004) 192 CTR 288 (Mad.)]

Land treated as agricultural land in wealth-tax assessment- Where land was treated as agricultural land in wealth-tax assessment for several years, it cannot be treated as non-agricultural land merely because it was lying fallow during the years under consideration

 Assessee’s land which was used for growing Crops & treated as agricultural land in Wealth Tax assessments for several years & also classified as such could not be treated non-agricultural mainly for the land lying fallow in the relevant years or being in locality where development had taken place. ( Assessment Years: 1988-89 to 1990-91)

[Sudisha Farm nursery v. ITO (2004) 88 ITD 638; (2003) 81 TTJ 714 (ITAT Delhi)]

Agricultural income- Nursery Income from Nursery would be exempt, if it is proved that basic Agricultural operations on Land were carried out. Thus Income earned from such Nursery even if meant for business would amount to agricultural Income.  Assessment Year: 1998-99) –

[CIT v. Satinder Singh (2001) 29 ITR 183 (Del)]

Jagir income is agricultural income. ( Assessment Years: 1970-71, 1971-72)-

[CIT v. Soundarya Nursery (2000) 241 ITR 530 (Mad)]

Seeds are clearly a product of agriculture and the income derived from the sale of seeds derived on account of cultivation by the assessee is an agricultural income. –

Certainly these judgements can be lot of help to the people at large if they are in earning Agriculture Income of the assessee .


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I am S.K.Jain , Tax Consultant cum Advocate practising in Income Tax , GST , Company Matters . The name of the concern is S.K. Jain and Co. and I am prop. of this concern . I am in practice for the last 30 years . Professionals and non professional can feel free to contact me on mail . My mail ID is View Full Profile

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