Law: Income Tax Act, 1961

Section: 2(1)

Income-tax----Agricultural income---Income from nurseries---Income from sale of plants grown in pots---Income from sale of seeds---Agricultural income-,-Indian Income Tax Act, 1961, S.2(1). All the products of the land which have some utility- either for some consumption or for trade or commerce if they are based on land would be agricultural products. If the plants sold in pots were the result of basic operations on the land expending human skill and labour thereon and if after performance of the basic operations on land the resultant product grown or such part thereof was suitable for being nurtured in a pot with water or by placing them in the green house or in shade or after performing several operations such as weeding, watering, manuring, etc., and are made ready for sale, all these operations are agricultural operations and the plants are products of agriculture. The assessee was carrying on business of a nursery and various types of fruit plants, flower plants, vegetable plants and seedlings were grown. The assessee's activities were to prepare seedlings on scientific basis, grow plants on prepared beds and after several operations carried out on the land, viz., cutting, gootying and inarching, they were transplanted in suitable containers including pots and kept in the green houses or in shade and then sold. The assessee claimed that the income derived from the sale of plants grown in pots and sale of seeds constituted agricultural income. The Tribunal up held the contentions. On a reference: Held, that the income from .the sale of plants grown in pots and the sale of seeds derived on account of cultivation by the assessee was agricultural income. CIT v. Raja Benoy Kumar Sahas Roy (1957) 32 ITR 466 (SC) applied. Maharaja Vibhuti Narain Singh (H.H.) v. State of U.P. (1967) 63 ITR 364 (All) ref. JUDGMENT R. JAYASIMHA BABU, J.------The question brought before us by the Revenue is, as to whether the income from sale of plants grown directly in the pots and the sale of seeds, can be treated as agricultural income within the meaning of section 2(1) of the Income Tax Act, 1961? The finding of the Tribunal is that the plants were not grown in the pots…

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