Case Law Details
DCIT Vs Pravardhan Seeds Pvt. Ltd. (ITAT Hyderabad)
Brief facts of the case are that assessee is engaged in the business of production of hybrid seeds and open pollinated seed varieties of various crops like cotton, paddy, maize, sunflower, bajra, wheat, jowar, vegetables, etc. It is carrying out the agricultural operation in whole of India; that since it is not possible for the assessee to own all the land, as required for the purpose of its agricultural operations, it has accordingly taken certain land on lease from farmers and has also availed services of farmers by entering into seed production agreement for usage of their land; that the farmers are provided with foundation seeds for carrying out the agricultural activities/cultivation for multiplication of seeds under the guidance, specifications and supervision of the assessee; that the farmers are required to deliver the final produced hybrid seeds including un-utilized foundation seeds in the assessee; that in lieu of the said activities, the assessee agrees to pay the farmers compensation for land usage and reimbursement of cultivation expenses and service charges as per terms of the agreement and the entire risk and reward of growing the hybrid seeds, with regard to the said agricultural activities/cultivations, is entirely borne by the assessee.
There is no dispute about the activities conducted by the assessee or the assessee conducting such activities year after the year. It is also not in dispute that for the earlier assessment year, 2012-13, initially, no such disallowance of claim under section 10(1) of the Act was made, but was made consequent to the order under section 263 of the Act. It is also not in dispute that the order under section 263 as well as the order under section 143(3) read with section 263 of the Act were quashed. It is also not in dispute that the activities conducted by the assessee in this case are similar to the activities of M/s. Nuziveedu Seeds Ltd.
10. Learned CIT(A) followed the view taken by a Co-ordinate Bench of this Tribunal in the case of M/s. Nuziveedu Seeds Ltd., (supra) for the assessment year 2010-11 and 2011-12. In that case, a Co-ordinate Bench of this Tribunal while dismissing the appeal preferred against the orders of the learned CIT(A) allowing such a claim, followed the decision of the Hon’ble jurisdictional High Court in the case of Prabhat Agri Biotech (supra). It is not the contention of the Revenue that they have challenged the decision of the Hon’ble High Court in the case of Prabhat Agri Biotech (supra) in any higher forums. When the binding precedent of the Hon’ble jurisdictional High Court stands undisturbed, it is not open for the Revenue to contend that since they have preferred an appeal against the order of the Tribunal in M/s. Nuziveedu Seeds Ltd., (supra), the law on this aspect is not settled.
Learned Assessing Officer does not deny the fact that the activities of the assessee include such operations as are defined as the agricultural operations under section 2(1A) of the Act. Complaint of the learned Assessing Officer is that merely because the assessee is conducting the activities like sowing, weeding, irrigation, inter-cultivation etc., the same cannot be considered as agricultural operations under section 2(1A) of the Act, because assessee conducts such activities as incidental to the main activity of producing foundation seeds which is a commercial activity in nature.
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