· The assessee was carrying on agricultural operation in the agricultural land owned by him and derived income from sale of replanted trees, flowers and creepers.
· The assessment was completed under Section 143(3). Later, the case was reopened and the Assessing Officer raised a demand on the assessee by treating the agricultural income as business income.
· The CIT(A) allowed the claim of the assessee by holding that the income from nursery is an agricultural income. In reaching to this conclusion, the appellate authority referred to the decision of a Division Bench of the Madras Court in CIT v. Soundarya Nursery [2000] 241 ITR 530 and held that even the plants grown in pots is an agricultural activity as they involve all the activities of agriculture farming like seeding, weeding, watering, manuring etc.
· Following the aforesaid decision of Soundarya Nursery's case (supra), the Appellate Tribunal upheld the order of the appellate authority and dismissed the appeal of the revenue.
· The Hon’ble Court, after discussing the above facts, has held that the sale proceeds of plants raised in a nursery, on the land belonging to the assessee constitutes agriculture income.
For further reading, refer the attachment.
Further Reading