Shrikant Basangouda Patil Vs ITO (ITAT Bangalore)
Sun-Dried Raisins Remain Agricultural Income – No Tax on Traditional Raisin Making- Conversion of grapes into raisins by traditional method is agricultural activity
Assessee, a simple agriculturist from Vijayapur, was engaged in cultivation of grapes. In AY 2020–21, he declared income of ₹4,80,100. His agricultural receipts included ₹58,94,436 from sale of raisins. AO Officer held that conversion of grapes into raisins was not agricultural activity, & therefore bifurcated receipts in 60:40 ratio, treating 60% as business income & only 40% as agricultural income. Consequently, an addition of ₹18,84,665 was made.
Assessee argued that Grapes were grown by the assessee himself & Unsold grapes were dried naturally in sunlight to produce raisins. No machinery, chemicals or scientific process was used. In AY 2018–19, the department itself accepted raisin sales as agricultural income.
Revenue relied on ITAT Pune decision in M/s Bafna Agro Farm (2023), where conversion of grapes into raisins using chemicals, machinery, power & manpower was held to be a commercial process, leading to taxation as business income.
Tribunal observed that Assessee is an agriculturist and deriving income by selling grapes. Assesse is using traditional methods for converting the grapes into raisins No material has been brought on record by AO to refute the factual aspect that the assessee is not using traditional methods for conversion of grapes into raisins. Tribunal noted that the judgment relied upon by Dept is not applicable to the facts of the present case as that was a case of agro farm of partnership firm, which was engaged in trading of various agricultural produce as well as engaged in conversion of grapes into raisins by deploying scientific methods. Facts in that case are completely different from the facts as involved in the present case. In AY 2018-19, Revenue itself has accepted the activities of conversion of grapes into raisins as agricultural activities. Circular No.247/04/2025-GST has categorically clarified that an agriculturist supplying raisins is not liable to be registered under section 23(1) of the CGST Act and is exempt from GST. ITAT held that conversion of grapes into raisins through traditional method is part of agricultural operations. AO’s bifurcation of receipts in 60:40 ratio was unjustified.
