Institute conducting coaching classes and charging fees, denial of exemption is held to be not valid.(S. 10(23C) (vi))

The Institute of Chartered Accountants of India was denied exemption u/s. 10(23C) (vi) for the A.Y. 2006-07 onwards on the grounds that (i) the Institute was holding coaching classes and, therefore, was not

Compensation received on demolition of borewell is agricultural income

Ghanshyam Mudgal v. ITO (2012) 143 TTJ (UO) 60 (JP), BCAJ Pg. 43, Vol. 44-A Part 1, April 2012(Jaipur) (Trib.)

Conversion of raw peas into pea seeds constitute agricultural income

Assessee is engaged in cultivating and growing raw peas and also in the process of converting them into pea seeds so as to render them fit for sale and also selling seeds in the market and to various godowns. Income derived from pea seeds constituted agricultural income.(A.Y.1997-98)
CIT v. Rana Gurjit Singh (2012) 340 ITR 108/75 DTR 376 (P&H.)(High Court)

Company supplying seeds to farmers under agreement income derived by company is not agricultural income

The assessee company is in the business of cultivation, production and marketing of open-hybrid seeds both for the domestic and international market and entered in to agreement with the farmers for production of pen –hybrid seeds for its own benefit or on behalf of its overseas principals. Assessee Company supplied the seeds & supervised the cultivation of seeds. After harvesting, the company purchased from farmers at fixed price. Assessee company has done the process of cleaning, grading and converting into certified seeds. Assessee has claimed entire income as exempt under section 10(1). Assessing Officer denied the exemption. On appeal before the Tribunal the tribunal opined that 10 percent of the net profit should be treated as business income and balance 90 percent of the net profit as agricultural income exempt from tax. On appeal to High Court by revenue the court held that the income is not agricultural income.( A.Y. 1998-99 to 2004-05) CIT v. Namdhari Seeds P. Ltd ( 2012) 341 ITR 342 (Karn.) (High court)

Product fit for marketing is agricultural income and extraction of oil from fruit / kernel is an industrial activity and assessable as business income.

The assessee is a plantation company which is engaged in cultivation of oil and processing and extraction of crude palm oil from fruit as well as from the kernel. The Assessing Officer held that part of income earned by assessee from sale of palm oil as business income by applying Rule 7 of the income –tax rules . In appeal the view of Assessing Officer was confirmed. On further appeal, the High Court held that the processing covered by item(ii) of section 2(IA)(b) is only so much of process which a cultivator ordinarily engages to make product for marketing, therefore income that is attributable to agricultural operations is the market value of palm fruit with pulp and kernel. Activity carried out by assessee in extraction of oil from fruit /from kernel is an industrial activity and therefore income from such activity is assessable as its ‘profits and gains of business’ under section 28(i). Appeal was decided in favour of revenue.(A.Ys 1997-98 to 2006-07)
Oil Palm India Ltd v. ACIT ( 2012) 206 Taxman 1 (Ker.) (High Court)

Barren Land is not agricultural Land and liable for capital gains tax

Assessee sold the land and claimed the exemption on the said transaction treating the same as agricultural land. Tribunal held that land in question was a barren land surrounded by rocky mountains and not fit for agricultural operations. Sale of the said land was not for agricultural purpose but for purpose of construction of flats, therefore the land in question is capital asset and liable to capital gains tax. (A. Ys. 2002-03 to 2007-08).
Suresh Kumar D.Shah v. DCIT (2012) 49 SOT 341 (Hyd.)(Trib.)