Agricultural Operations Cannot Be Dubbed As ‘Commercial Activity’ Merely For Commercially Selling Hybrid Seeds And Open Pollinated Seed Varieties: ITAT
Live LawThe Hyderabad Bench of the Income Tax Appellate Tribunal has held that when agricultural activity is conducted and seeds are produced, merely because the seeds were sold commercially, the basic agricultural operations also cannot be dubbed "commercial activities" and not ‘agricultural activities’.The bench of K. Narasimha Chary and Rama Kanta Panda has held that when agricultural activity is conducted and seeds are produced, merely because the seeds were sold commercially, the basic agricultural operations also cannot be dubbed "commercial activities" and not ‘agricultural activities’. The definition of agriculture as contemplated in Section 2 does not cover the activity of foundation seed production by the assessee, just because the assessee is undertaking basic agricultural operations like sowing, weeding, irrigation, inter-cultivating, etc., and that such agricultural activities are only incidental to the main activity of production of foundation seed. According to the Assessing Officer, the assessee departed from the basic agricultural operations and indulged in the production of the parent seeds by planned scientific and specialized procedures, apart from the fact that the assessee itself is not carrying out the agricultural operations, but the farmers are carrying out the activity of multiplication of parent seeds under the contractual obligation with the assessee. The tribunal dismissed the appeal of the assessee and noted that the complaint of the learned Assessing Officer is that merely because the assessee is conducting activities like sowing, weeding, irrigation, inter-cultivation, etc., the same cannot be considered agricultural operations under Section 2 of the Act because the assessee conducts activities as incidental to the main activity of producing foundation seeds, which is a commercial activity in nature.
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Income From Nursery Activities Of Growing Various Types Of Lawns, Flower Plants And Vegetable Plants Is Agricultural In Nature: ITAT
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