The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the activity of growing of hybrid seeds can be treated as an agricultural activity and therefore, the income received from the same is exempted under the Income Tax Act, 1961.
The assessee is engaged in the activity of growing hybrid seeds. The Assessing Officer rejected the claim of the assessee that the same amount agricultural activity and therefore, no income tax can be levied on the same.
The Tribunal noted that the Aurangabad Bench of Bombay High Court in CIT Vs. Ajeet Seeds Ltd held that the assessee’s income arose from sale of breeder and foundation seeds.
“The Hon’ble High Court vide para 4 observed that when breeder seeds and foundation seeds are grown successfully, lot of scientific help was required and it was only after such skilful and scientific process, such seeds were grown. The question which was before the Hon’ble High Court was whether growing of such seeds does not amount to agricultural activity. The Revenue has in turn, relied on the decision of Hon’ble High Court of Karnataka in CIT Vs. Namdhari Seeds (P.) Ltd. (2011) 341 ITR 342 (Kar). The Hon’ble High Court held that the basic premise on which assessee’s case was based had no relation whatsoever with the judgment of the Hon’ble High Court of Karnataka in CIT Vs. Namdhari Seeds (P.) Ltd. (supra). Then, addressing the issue whether growing of breeder and foundation seeds would amount to agriculture, it was held that the answer had to be affirmative,” the Tribunal observed.
While granting relief to the assessee, the Tribunal held that growing of hybrid seeds in the case of assessee can never be held to be non-agricultural activity. Hence, the assessee is entitled to claim deduction under section 10(1) of the Income Tax Act.
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