MADHU RAMESH JAIN,MUMBAI vs. ITO 17(2)(3), MUMBAI

This appeal has been filed by the assessee against the order of the CIT(A)-28, Mumbai dated 24.08.2017 for A.Y. 2013-14 in the matter of order passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter “the Act”).

In this appeal assessee is aggrieved for assessing agricultural income of Rs.41,43,463/- as income from other sources. 3. Rival contentions have been heard and record perused. The facts in brief are that the assessee is an individual. The assessee filed her return of income for the previous year relevant to impugned assessment year 2013-14 on 29.09.2013 declaring total income of Rs.3,03,873/-. The assessee filed her revised computation of income vide letter dated 13.07.2015 declaring total Shri Madhu Ramesh Jain income at Rs.3,25,930/-. The Return filed by the assessee was selected for scrutiny assessment and a notice under Section 143(2) of the Act was served on the assessee on 04.09.2014 Subsequently, notices dated 03.07.2015 and 20.11.2015 under section 142(1) were also served to the assessee along with detailed questionnaire. During the course of assessment it was observed that the assessee has shown agricultural income of Rs.41,43,463/-. Therefore, the assessee was asked to submit a copy of 7/12 extract of agricultural land, bills/vouchers of agricultural income and expenses. The assessee in reply to the same filed her letter dated 29.10.2015 and explained that she has earned agricultural income amounting to Rs.41,43,463/- out of agricultural Land at 414/2 and Gat 160 & 69. The assessee further explained that the Land Gat No. 414/2, Mehrun, Jalgaon belongs to her. It was also explained that the Land Gat No. 160 & 69 situated at Rajani Taluka, Jamner Dist, Jalgaon is belonging to one Smt. Tarabai M. Kothari & others (holding 30% share) on one part and the assessee (holding 70% share) on other part. An agreement with respect to the same and a copy of the 7/12 extracts were submitted before the AO. 4. Assessee filed details as required by the AO along with documentary evidences called by the AO. It was submitted before the AO that during the impugned assessment year assessee earned agricultural income from sale of Mango, Mosjambi, Custard Apple, Amrood, Chiku, Lemon and cotton out of Land Gat No. 414/2 and 160 & 69. The said agricultural income has been deposited in the Corporate Bank, Account No. 34071 at Nariman Point Mumbai and the same has also been reflected in the books of accounts of the assessee. During the course of assessment proceedings assessee was asked to justify the claim of agricultural income earned during the year under consideration. In response to the said query of the Ld. A.O. the assessee vide her letter dated 07.12.2015 submitted that the assessee is carrying on agricultural activity on the said two pieces of land since last 15 Shri Madhu Ramesh Jain to 20 years. The agricultural produce are sold to fruit & vegetable merchants through commission agents who look after the activities of collecting the produce and carrying them to the godown. The expenses incurred on this account are retained by these people out of sale consideration. Further, the AO did not agree with the assessee’s contention and treated the agricultural income as income from other sources. By the impugned order the CIT(A) confirmed the action of the AO against which the assessee is in further appeal.

We have heard the rival contentions and carefully gone through the orders of the Authorities below and found from record that the income earned out of the above land falls under the definition of “agriculture income" as per section 2(1A) of the Act. Thus, the said income is exempt from tax under Section 10(1) of the Act. Reliance can be placed on the judgment of Hon'ble Supreme court in the case of CIT vs. Raja Benoy Kumar Roy [1957] 32 ITR 466 (SC) wherein it was held that: "If the integrated activity of the agriculturist, viz; agriculture, which includes the basic operations and the subsequent operations is undertaken and performed in regard to any land, that land can be said to have been used for agricultural purpose and the income derived there from can be said to be agricultural income derived from the land by agriculture."

Furthermore, with respect to the query raised regarding money received out of agricultural activities and deposited in the Bank the assessee submitted the copy of cash book; and bank book of Corporation Bank Account No. 34071 maintained in the books of accounts of the assessee. The assessee also submitted all the details and documentary evidences before the A.O. to substantiate the genuineness of the agricultural income earned during the year under consideration.

From the documents placed on record we find that during, the impugned assessment year she earned agricultural income amounting to Shri Madhu Ramesh Jain Rs.30,68,126/- from the sale of Mango, Mosambi, Custard Apple, Amrood, Chiku, Lemon produced out of Land Gat No. 414/2. The assessee incurred expenditure of Rs.2,88,532/- for carrying said agricultural activity. The assessee also earned agricultural income from sale of cotton produced out of Land Gat No. 160 & 69 situated at Jamner Dist. Jalgaon and incurred expenditure of Rs.4,04,699/- for carrying said activity. The said income and expenditure is reflected in the books of accounts of the assessee and the same was filed before the A.O. The assessee also furnished the copy of the 7/12 extracts before the A.O. 'The agricultural products carried out of said lands were sold to vegetable merchants through the commission agents. The commission paid to the brokers is accounted in the books of the assessee. The details of commission and other expenditure incurred was submitted before the AO.

From the record we also found that the agricultural income earned from the said lands were deposited in Corporation Bank, Account No. 34071 at Nariman Point. The assessee to substantiate the genuineness of the claim of agricultural income has submitted Balance Sheet, Profit & Loss Account, Cash Book, Bank Book, Vouchers towards supply of tractors and details of expenses incurred before the AO.

In view of the above we do not find any merit for treating the agricultural income as income from other sources.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 11th September, 2018.