Facts of the case: The assessee is engaged in the activity of growing hybrid seeds.
He has claimed that the sale of hybrid seeds is exempted under the Income Tax Act, 1961 on the grounds that hybrid seeds are agricultural activity.
Issue involved : The Assessing Officer rejected the claim of the assessee by clarifying that sale of hybrid seed is not an agricultural activity and therefore, income tax can be levied on the same.
Relevant points to be considered:
- The Honorable High Court has considered the case of the Aurangabad Bench of Bombay High Court in CIT Vs. Ajeet Seeds Ltd. Where the assessee’s income arose from sale of breeder and foundation seeds.
- It was observed that breeder seeds and foundation seeds are grown only after skillful and scientific process and these seeds can’t be amount to an agricultural activity.
- Again, the decision of Honorable High Court of Karnataka in CIT Vs. Namdhari Seeds (P.) Ltd. Was considered, in which the court held growing of breeder and foundation seeds would amount to agriculture.
Conclusion: the Tribunal held that growing of hybrid seeds in the case of assessee is an agricultural activity and it cannot be taxed under the Income Tax Act,1961.
Hence, the assessee is entitled to claim deduction under section 10(1) of the Income Tax Act, 1961.