PERMANENT AGROTECH PRIVATE LIMITED,NAGPUR vs. ACIT-CIRCLE-2, NAGPUR

Whether 0n the facts and circumstances Of the case; the CITIA) was justified in accepting the agricultural income at Rs.1,00,00,000/- 4 The only Issue involved in the appeal filed by both the parties relates to the estimation of agricultural income earned by the assessee. 53 The facts of the case; in brief; are that the assessee i5 3 private limited company mainly engaged in the business of construction during the vear, The assessee submitted the return on 30/09/2009 declaring total income of Rs.1,16,27,421/-. Subsequently, assessment was completed ujs 14303) of the Act on a total income of Rs.14,86,95,726/- in which the Assessing Officer treated the agricultural income declared by the assessee at Rs,3,46,09,022/- by taking the gross agricultural receipt amounting to Rs.3,70,68,305/- as income from other sources: When the matter went before the CIT(A); the CIT(A) after appreciating the facts as well as going through the decision of Hon'ble Bombay High Court in the case of CIT vs P, C Joshi [1993] 202 ITR 1017 Hon'ble Delhi High Court in the case of CIT VS; Krishan Kumar Kapoor [2001] 251 ITR 150 (Del) and also the decision of Nagpur Bench of this Tribunal in LT.A No.273/Nag/2O05 dated 06/10/2006 for the assessment year 2001-02. From the decision of Nagpur Bench of the Tribunal, the CIT(A) noted that in that case the Assessing Officer has estimated the net agricultural income at nil per acre while the Tribunal for the assessment year 2001-02 estimated the agricultural income at Rs.30,463/- per acre: The CIT(A) also noted the finding recorded by the Assessing Officer under para 3 which reads as under: "The assessee is showing agricultural income worth Rs,3.46 crores from land of 577 acres If we consider that the whole of the land wa5 cultivated (it was later found that more than 150 26 1.'TA No.229 & 250/NAG{2014 Assessmenlt year.2009-10 acres of land was uncultivated), then the land to income ratio works Out to Rs.60,000/-per acre; The assessee has not produced even the basic evidence regarding agricultural income let alone the impossible results. and ultimately estimated the income of the assessee @Rs,60,000/- per acre as mentioned by the Assessing Officer taken 211.49 acres land to be the cultivated Iand out of the total land owned by the assessee 577.25 acres and thus; worked out the gross agricultural receipt at Rs.1,26,89,400/- and after allowing the expenditure, he restricted the agricultural income to Rs.1,00,00,000/ 6_ We have heard the rival submissions; carefully considered the same the orders of the tax authorities below. We noted that the along with Is a private limited company. The accounts of the assessee assessee during the impugned assessment year are duly audited The assessee has audited report and the audited balance sheet with the duly filed the The assessee Is owning 577.25 acres of agricultural land: This Annexures, fact has not been denied by either of the party. The assessee returned the net agricultural incore at Rs.3,46,09,022/- after deducting from the gross receipt sum of Rs.3,70,68,305/ agricultural expenses of Rs.24,59,303/- The Assessing Officer issued the notice to the assessee ujs 14201) and asked the assessee to file various details with reference to the agricultural and addresses of the persons from whom the land and the name consideration was received in cheque as well as in cash and it was noted has received consideration towards the agricultural that the assessee to the extent of Rs.1,70,68,304/- through cheque_ Rest Qf the produce consideration was shown to be received in cash: The assessee has duly filed the copies of 7/12 extracts and on that basis the Assessing Officer after obtaining the information from the Tehsiidar , District Superintendent; Agriculture Officer, Jt. Director APMC Kalamna and also after issuing the ITA No.229 & 250/NAG/2014 Asscssnent year:200g-10 various parties u/s 133(6) noted that the assessee has the notice to agricultural land to the extent of 577.25 acres and out of which only 150 acres of land is uncultivated and therefore; the remaining land of 420 acres is cultivated a5 observed by the CIT(A) also at para 8.4 of his order The Assessing Officer also mentioned in para 3 of his order that the ratio of the land to income works out to Rs.60,000/- per acre but ultimately without rejecting the books af account of the assessee took the whole of the gross of Rs.3,70,68,305/- to be the income from other agricultural receipt sources instead of accepting it to be the agricultural receipt and added the income Qf the assessee instead of adding a sum Of same in the total Rs.3,46,09,022/- which was claimed by the assessee to be the agricultural We also noted when the matter went before the CIT(A); the income_ CIT(A) took the view a5 if the assessee has cultivated Iand to the extent of 211,49 acres and estimated the gross yield thereon @Rs.60,000/- per acre which comes to Rs.1,26,89,400/- and ultimately restricted the agricultural Rs.1,00,00,000/ We have gone through the orders of the income to authorities below as well a5 the evidence ad documents relied on before 4S, we noted that Nagpur Bench of this Tribunal in IT.A.No.273/Nag/2005 wile deciding the similar issue in assessment year 2001-02 held as under: "Though the AO has expressed the opinion that agricultural expenses are low, he has not pointed out any instances or does not corroborate his conclusion with any relevant material In circumstances; the action of the AO in rejecting the these income &5 shown in the P & L Account for agricultural income was not justified. The conciusions of the CIT(A) in this regard are, therefore; held to be proper ad call for no interference: Once the books of accounts are accepted &s correct; there can justification For the 4O to reject the income from be no agriculture as shown bY the assessee We also find that there Is absolutely no basis for the AO to havee come to the conclusion that Rs,20,000/- per acre would be the proper agricultural income in the case of the assessee In the circumstances; We hold that the income from agriculture as declared by the 725 26 LTA No.229 & 2S0/NAG/2014 Assessment year:zun9-10 has t be accepted ad the CIT(A) is justified in assessee directing the AO to accept the agricultural income 25 declared by the assessee: The order of the CITIA) deleting the addition Of Rs, 19,93,155/- under the head income from other source Is, therefore; sustained and this appeal Of the revenue {5 dismissed this decision; wve also noted that the Tribunal has also referred to In another decision of Nagpur Tribunal in the case of Bhausaheb G Mulak in I,TANO, 929 to 932/NAG/1995 wherein the Tribunal has held 11% of the agricultural receipt as reasonable expenses to arrive at acceptable gross income. We also noted that in that case the CIT(A) has agricultural accepted agricultural incore @Rs30,463/- per acre_ In this case, we noted that the Assessing Officer has not rejected the books of account of the assessee and without rejecting the books of account went On estimating the income of the assessee Since the assessee has not taken any plea in this regard, the only course left out before uS relates to the estimation of the agricultural income It i5 not denied that the assessee is owning the agricultural land to the extent to the extent of 577.25 acre: The Assessing Officer in para 3 of its order has specifically mentioned that of the said land, 150 acres was uncultivated land therefore; the out cultivated Iand cones to 427.25 acres. The CIT(A); we noted, while estimating the gross agricultural receipt; has accepted the agricultural vield @Rs.60,000/- per acre; On the basis of the decision of Nagpur Tribunal in LT.A.No.273/Nag/2o05 in which during the assessment year 2001-02 the agricultural income was estimated at Rs,30,463/- per acre, Learned counsel for the assessee, before US, submitted the extracts Of the agrlcultural land from page 42 &5 well as details of the agricultural produce Keeping in view the fact that the assessee has taken mare than by him: two crops from the land; the estimation of agricultural yield, in our opinior; acre is on lower side. We; therefore, direct the @Rs.60,000}- per 122 L.TA No.229 & 250/NAG/2014 Assessment year:200g-10 Assessing Officer to estimate the yield @Rs.65,000/ per acre in respect of 427,25 acres of land: Learned counsel for the assessee even through vehemently conterded before us that in some of the 7/12 extracts; the crop has not been properly mentioned and therefore, out of the rest land also the assessee got the income by way of agricultural produce but in the absence of any contrary evidence being brought on record, we dismiss this Qf Learned counsel for the assessee: Thus, estimation of the plea agricultural yieid @Rs.65,000/- per acre; te gross agricultural receipt will come to Rs,2,87,51,250/ Thus, the gross agricultural receipt in the case of the assessee will come to Rs.2,87,51,250/-. We also noted that this Tribunal in the case f Bhausaheb 6, Mulak in I.TANO. 929 to 932/NAG/1995 has held 11% of the gross agricultural receipt as reasonable No contrary decision was brought to our krowledge: We, expenses: therefore, respectfully following the said decision; direct the Assessing Officer to take the agricultural expenses at 11% of the said sun of Rs.2,87 51,250/- which comes to Rs.31,62,632/-. Thus; the Assessing Officer is directed that the agricultural income of the assessee be restricted ta Rs.2,56,00,000/- in place of Rs.1,00,00,000/- as directed by the Assessing Officer. 7 In the result; the appeal of the assessee is partly allowed while the appeal of the Revenue is dismissed. (Order was pronounced In the open court on 24/11/2017 . . P K.BANSAL } Vice President (PAWAN SINGH) Judicial Member Dated:24/11/2017 *Singh