INCOME TAX ACT, 1961

Section 10(1) Section 2(1A)

Exemption under section 10(1) - Definition of agricultural activity - Purchase of mother plants and sale of flowers developed therefrom, whether agricultural activity -

Assessee was engaged in business of agricultural activities of growing and selling flower plants mainly for export purpose. Assessee claimed exemption under section 10(1) read with section 2(1A). AO denied the same on allegation that income was chargeable to tax as business income, as activities of purchase of mother plants and sale of flowers developed therefrom, carried out by assessee did not amount to agricultural activities. Held: Tribunal considered nature of activity carried out by assessee and after taking into account Explanation 3 to section 2(1A), inserted by Finance Act, 2009, held that income derived by assessee from such activity as agriculture inasmuch as Explanation 3 states that 'income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income'. Tribunal further relied on CBDT Circular No.01/2009 dated 27-3-2009 explaining rationale of Explanation 3. It was seen that similar issue was decided by Tribunal in assessee's own case for assessment year 2013-14. Since issue under consideration was fully covered by orders passed by Tribunal for earlier years, following same, issue was to be decided in favour of assessee.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

INCOME TAX ACT, 1961

Section 32

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