| The Tax Publishers2020 TaxPub(DT) 3975 (Hyd-Trib) INCOME TAX ACT, 1961
Section 2(1A) Section 10(1)
Where land from which rent was received was either used for research and development or kept vacant but not used for agricultural purposes and unless there was some measure of cultivation of land and some skilled labour was performed on land for cultivation, land cannot be said to have been used for agricultural purposes, then in such circumstances rent derived from land cannot be treated as agricultural income.
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Agricultural income - Lease income derived from agricultural land - Lessee not used land for agricultural purposes -
The assessee's had claimed agricultural income. On query it was explained that each of the assessee own 20 Acres of agricultural land and the same was given on lease to Biotech Laboratories India Limited on a yearly lease rent of Rs. 24,000 per acre. The CIT(A) concluded that the amount received by both the assessee from the company in the form of lease rent will not fall under the definition of agricultural income as envisaged under section 2(1A) of the Act. Accordingly, the CIT(A) held that both the assessee are not eligible to claim exemption under section 10(1) of the Act., and therefore dismissed the appeal of the assessee's. Further the benefit granted by the AO for treating the amount of Rs. 4,80,000 as agricultural income out of the total lease rent received of Rs. 24,00,000 during the relevant assessment year was withdrawn in the case of both the assessee's by the CIT(A). Held: Land from which rent was received should be used for agricultural purposes. In the case of assessee, it was evident that the land was either used for research and development or kept vacant but not used for agricultural purposes. Unless there was some measure of cultivation of land and some skilled labour is performed on land for cultivation, the land cannot be said to have been used for agricultural purposes. It was essential that basic primary operation, prior to germination of the produce, involving expenditure of human skill and labour on the land and subsequent post-germination operations such as weeding, digging of the soil around the growth, etc., should be performed in order to constitute agricultural activity. Company had obtained the land on lease from the assessee has apparently not indulged in any such activities.
Relied:Proagro seeds v. JCIT (2003) reported in 126 Taxman 37 (Del-Trib), ITO v. Namdhari seeds Pvt. Ltd. [2012] reported in 341 ITR 342 (Kar HC) : 2011 TaxPub(DT) 1959 (Karn-HC), K. Lakshmanan & Co. v. CIT [1999] reported in 239 ITR 597 (SC) : 1999 TaxPub(DT) 0404 (SC) and CIT v. Stanes amalgamated estates Ltd. reported in (1998) 232 ITR 443 (MAD HC) : 1998 TaxPub(DT) 0738 (Mad-HC).Followed:CAT v. Raja Benoy Kumar Sahas Roy (1957) reported in (1957) 32 ITR 466 (SC) : 1957 TaxPub(DT) 0152 (SC).
REFERRED :
FAVOUR : Against the assessee.
A.Y. : 2015-16
IN THE ITAT, HYDERABAD BENCH
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