Bombay Super Hybrid Seeds Limited Vs DCIT/ACIT (ITAT Rajkot)
In this case, the ITAT Rajkot held that income earned by a company engaged in production of hybrid seeds on leased agricultural land qualifies as agricultural income and is exempt u/s 10(1), overturning the AO and CIT(A)’s view that it was business income.
The Tribunal observed that the assessee had effective control over agricultural operations-it leased land, appointed coordinators, supervised farming activities, bore all risks, and incurred expenses for seeds, fertilizers, labour, and cultivation. Even though farmers physically carried out operations, they did so under the assessee’s direction and supervision, making the assessee the real cultivator.
It was held that ownership of land is not essential; what matters is control, risk, and involvement in agricultural operations. The Tribunal relied on the wide scope of Section 2(1A) and concluded that modern scientific or technical methods (like hybrid seed production) do not take the activity outside agriculture.
Accordingly, the addition of ₹13.69 crore (treated as business income by AO) was deleted.
However, smaller additions relating to unexplained creditors (₹23,643) and unexplained expenditure (₹8.95 lakh) were sustained due to lack of proper evidence.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
Captioned appeal filed by the assessee, pertaining to Assessment Year 2023-24, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by Commissioner of Income-tax (Appeals) dated 09.01.2026, which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3), r.w.s. 144B of the Income tax Act, 1961, vide order dated 29.03.2025.
