Case Law Details
Flower valley Agro Tech Pvt. Ltd Vs ITO (ITAT Mumbai)
We find that certain trees lying on assessee’s land were cut since the same were obstructing the hire tension wires of the Electricity Company. For the same, the assessee was compensated for Rs.10.14 Lacs during the year. We observe that the assessee was engaged in the business of manufacturing and trading of essential oil, plantations & extraction of essential oils. Therefore, the trees so cut by the assessee would form part of its trading operations since the assessee would be earning revenue by utilizing these trees. Had the trees not been cut, the assessee would have earned more revenue from the trees. Therefore, any compensation received in lieu of loss thereof would form part of assessee’s trading operations. The same is evident from the fact that cut trees sold by the assessee constituted its trading income and the same were accepted to be agricultural income. In our considered opinion, similar treatment was to be given to the compensation received for loss of trees. It would akin to a situation where the assessee lost its trading stock and received compensation for loss of the stock. The same would certainly be trading income for the assessee. Since, the income was earned from trees; the same would constitute agricultural income in the hands of the assessee. We order so.
FULL TEXT OF THE ITAT JUDGEMENT
1. Aforesaid appeal by assessee for Assessment Year (AY) 2015-16 contest the order of Ld. Commissioner of Income Tax (Appeals)-8 Mumbai, [in short CIT(A)], Appeal No.CIT(A)-8/IT-187/2017-18 dated 22/04/2019 on following sole ground: –
1. On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeal has erred in confirming addition of a sum of Rs.10,14,000/- as income from other sources. The Assessee prays that such an addition be deleted as the same being Agricultural income or a capital receipt .
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