The Commissioner of Income Tax-II vs Gajanan Agro Farms

Income Tax Appeal No. 1704 of 2013 not on board. Mentioned. Upon mentioning, taken up on board along with Income Tax Appeal No. 1582 of 2013.

These two appeals under Section 260-A of the Income Tax Act, 1961 (the Act) challenge the common order dated 31st October, 2012 passed by the Income Tax Appellate Tribunal (Tribunal). The impugned common order pertains to the Assessment Years 2002-03 and 2003-04.

The Revenue has urged the following question of law for our consideration:

" Whether on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal, Pune Bench, Pune is justified in not interfering with the Commissioner of Income Tax (Appeal)''s decision that the amount of Rs. 32,69,820/- for the assessment year 2002-03 and Rs. 35,13,376/-for the assessment year 2003-04 respectively should be treated as agricultural income of the assessee firm under Section 2(1A) of the Income Tax Act, 1961?"

The Respondent-Assessee carries on business as agriculturalist at Kolhapur and filed its return of income for the Assessment Years 2002-03 and 2003-04 declaring its total income as ''Nil''. This on account of agricultural income not being included in total income. The Assessing Officer denied the benefit of exemption as agricultural income for both the Assessment Years. This on the ground that the Respondent-Assessee had not been able to show that agricultural land is owned by it.

In appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] on consideration of facts concluded that the Respondent was in possession of the land in question for the cultivation of sugarcane from the Maharashtra State Farming Corporation (MSFC). The CIT(A) on examination of the agreement executed between the parties, found that the Respondent-Assessee is required to pay consideration for use of the land. Thus, the CIT(A) allowed the appeal of the Respondent-Assessee.

On further appeal by the Appellant-Revenue, the Tribunal on examination of the record, concluded that there is no denial that the sugarcane is being cultivated by the Respondent-Assessee on the land owned by the MSFC. The Tribunal further records that the relationship between the MSFC and the Respondent-Assessee can be described as that of the landlord and a tenant. This is particularly so as the Respondent-Assessee was required to pay a fixed amount of Rs. 20 lakhs every year for the use of the agricultural land for cultivation to MSFC. In the above circumstances, the impugned order upheld the order of the CIT(A) and held that an amount of Rs. 32.69 lakhs and Rs. 35.13 lakhs for Assessment Years 2002-03 and 2003-04 are not liable to tax as they are agricultural income.

We find that the CIT(A) and the Tribunal have correctly recorded a finding of fact that the Respondent-Assessee did carry on activity of cultivation of sugarcane and the income derived therefrom, is agricultural income. This finding of fact is neither shown to be perverse and/or arbitrary. Therefore, no substantial question of law arises for consideration in the appeal as filed against findings of fact.

Accordingly, both the Appeals are dismissed. No order as to costs.