Satyenra Kumar Gutgutia Vs DCIT (ITAT Bangalore)
The Income Tax Appellate Tribunal (ITAT), Bangalore, dealt with two appeals filed by the assessee against orders of the Commissioner of Income Tax (Appeals)-11, Bengaluru, dated 5 March 2025, concerning Assessment Years (AYs) 2018-19 and 2020-21. Both appeals involved a common issue and were heard together.
The assessee operated a nursery business under the name Florence Flora Farm, engaged in growing and selling plants, seeds, seedlings, and flowers on agricultural land in the Bangalore and Hassan districts. The assessee filed returns declaring income as agricultural income, which is exempt under Section 10(1) read with Explanation 3 to Section 2(1A) of the Income Tax Act, 1961. The case was selected for scrutiny, and notices under Sections 143(2) and 142(1) were issued. Upon examination, the Assessing Officer (AO) held that income generated from tissue culture operations was not agricultural in nature, as such operations were carried out in laboratory conditions without involving cultivation on land.
The AO relied on the decision of the ITAT, Bangalore Bench “A,” in Invitro International (P) Ltd. v. DCIT, which held that operations not carried out on land or soil cannot be termed agricultural. The AO concluded that the tissue culture process constituted a non-agricultural operation and, therefore, income corresponding to such activities could not qualify as agricultural income under Section 2(1A). Consequently, Rs. 5,96,201 was treated as business income, and the assessment was completed at a total income of Rs. 11,60,361.
