K.S. Jhaveri, J. - By way of Income Tax Reference No. 40 of 2000, the Tribunal on an application by the assessee has referred the following question of law arising out of the order dated 18.11.1996 passed by the Income Tax Appellate Tribunal, Ahmedabad 'B' Bench in ITA No. 2753/Ahd/1990 for the assessment year 1986-87 for consideration of this Court:
"Whether on the facts and in the circumstances of the case, the income was agricultural income as defined in section 2(1A) and therefore exempt u/s 10(1) of the I.T. Act, 1961?"
1.1 Similarly, the assessee has filed Tax Appeal No. 24 of 2003 challenging the order dated 10.07.2002 passed by SMC Bench of the Income Tax Appellate Tribunal in ITA No. 1501/Ahd/1997 for the assessment year 1991-92 which was admitted by this Court for consideration of the following substantial question of law:
"Whether on the facts and in the circumstances of the case, the income was agricultural income as defined in section 2(1A) and therefore exempt u/s 10(1) of the I.T. Act, 1961?"
1.2 Since the assessee as well as question of law raised in the reference as well as the appeal are the same, the matters were ordered to be heard together by this Court.
2. The assessee - an HUF firm had filed return of income for the years in question claiming the entire income to be exempted u/s 10(1) of the Act on the ground that the said income was earned from the agricultural nurseries at Baroda in the name and style of M/s. Roses Garden and that the said income therefore represented agricultural income.
2.1 So far as Tax Reference No. 40 of 2000 is concerned, the Assessing Officer treated the agricultural land and the income therefrom as belonging to an Association of Persons of the members of the family of Shri Puransingh M. Verma with indeterminate shares and taxed the same at maximum marginal rate on substantive basis in the assessment of M/s. Baroda Nursery in which case the return was filed in response to notice u/s. 148 issued by the ITO declaring nil income and stating that the income from the nursery activities belonged to the HUF and is exempt u/s 10(1) of the Act. The said income was again taxed in the assessment of the HUF on a protective basis.
2.2 The said order was challenged before CIT(A) by the assessee and the CIT(A) held that the income derived from the nursery would be considered in the assessment of the assessee HUF. It was also held that the income derived from nursery is agricultural income liable to exemption u/s 10(1) of the Act and that though the assessment is required to be made on a substantive basis in the hands of HUF , the entire income derived from the nursery as included in the assessment is to be excluded being exempt u/s 10(1) of the Act.
2.3 On appeal before the Tribunal, the Tribunal held that the income earned by the assessee is not agricultural income as defined in section 2(1) and (sic) 2(1A) of the Act and hence not exempt u/s 10(1) of the Act.
2.4 Similarly, in the case of Tax Appeal No. 24 of 2003, the Assessing Officer did not accept the assessee's contention that the income from the said nursery business be considered as agricultural income and accordingly taxed the same. the assessee therefore filed an appeal against the ITO's order. The CIT(A) confirmed the action of the Assessing Officer. Being aggrieved by the same, the assessee approached the Tribunal with an appeal. The Tribunal after hearing the parties confirmed the orders passed by the lower authorities.
3. Mr. J.P Shah, learned advocate appearing with Mr. Manish Shah, learned advocate for the assessee submitted that the Tribunal erred in holding that the income earned by the assessee from growing of plants and selling thereof is not agricultural income and therefore not exempt under section 10(1) of the Act.
3.1 Mr. Shah has drawn the attention of this Court to the orders passed by CIT(A) and submitted that the observations made by CIT(A) are justified and the same are required to be upheld. He submitted that considering the definition of agriculture as laid down under the provisions of section 2(1A) of the Act and various decisions on the subject which are as follows, the income from nursery ought to have been considered as agricultural income:
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CIT v. Green Gold Tree Farmers (P.) Ltd. [2008] 299 ITR 262/167 Taxman 151 (Uttarakhand) |
(b) |
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A.T. Parthasarathiah & Bros. v. CIT [1963] 48 ITR 830 (Mys.); |
(c) |
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CIT v. Saundarya Nursery [2000] 241 ITR 530/[2002] 123 Taxman 372 (Mad.); |
(d) |
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CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC). |
4. Mr. Varun Patel, learned advocate appearing for the revenue in Tax Appeal No. 24 of 2003 submitted that in view of the amendment which is sought to be made by amending act and Explanation 3 which was added with effect from 01.04.2009 clearly indicates that prior thereto such incomes were not included as agricultural income and nursery is not an agricultural produce.
5. Mr. Nitin Mehta, learned advocate appearing for the revenue in Tax Reference No. 40 of 2000 supported the impugned orders passed by the Tribunal and submitted that the same having been passed in accordance with law does not call for any interference by this Court.
5.1 In support of their submissions, the following decisions have been cited by learned advocates for the revenue:
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CIT v. Namdhari Seeds (P.) Ltd. [2012] 341 ITR 342/[2011] 203 Taxman 565/16 taxmann.com 83 (Kar.); |
(b) |
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H.H. Maharaja Vibhuti Narain Singh v. State of Uttar Pradesh [1967] 65 ITR 364.(All.) |
6. Having heard learned advocates for both the sides and having gone through the materials on record, including the decisions on the subject cited by learned advocates for both the sides, we are of the opinion that the income derived from nursery is an agricultural income which is liable to exemption under section 10(1) of the I.T. Act, 1961. Section 2(sic) of the Act defines agricultural income and states as under:
'(1) (sic) "agricultural income" means
| (a) |
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any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land- revenue in the taxable territories or subject to a local rate assessed and collected by officers of the Government as such : |
(b) |
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any income derived from such land by: |
(i) |
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agriculture, or |
(ii) |
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the performance by a cultivator or receiver of rent-in- kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market, or |
(iii) |
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the sale by a cultivator or receiver of rentin-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in sub- clause (ii)... ' |
Similarly, Section 4(3) of the Act provides:-
" (3) Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them;
...................................
(viii) Agricultural income............... "
6.1 Learned advocates for both the sides have placed reliance on various decisions on the subject and therefore we think it fit to discuss the ratio laid down in the said decisions at the outset. The Apex Court in the case of Raja Benoy Kumar Sahas Roy (supra) has observed as under:
'While recognizing the force of the above expressions of opinion we cannot press them into service in favour of the assessee for the simple reason that "agricultural income " has been defined in the Constitution itself in Art. 366(1) to mean agricultural income as defined for the purposes of enactments relating to Indian income tax and there is a definition of " agricultural income " to be found in s. 2(1) (sic) of the Indian Income-tax Act. We have therefore got to look to the terms of the definition itself and construe the same regardless of any other consideration, though, in so far as the terms " agriculture " and " agricultural purposes " are concerned, we feel free in view of the same not having been defined in the Act itself, to consider the various meanings which have been ascribed to the same in the legal and other dictionaries.
We may also note here the dictionary meanings of the terms "Forestry" and "Cultivation."
The Shorter Oxford Dictionary, Vol.1, page 735, gives the meaning of "forestry" as the "science and art of forming and cultivating forests, management of growing timber."
Webster's New International Dictionary, Vol. 1, page 990, gives the following meaning of forestry:
" Science and art of farming, caring for, or cultivating forests; the management of growing timber." Webster's New International Dictionary. Vol. 1, page 643, while talking of cultivation says that "to cultivate" means "(i) to prepare, or to prepare and use, for the raising of crops; to till; as, to cultivate the soil; to loosen or break up the soil about (growing crop or plants) for the purpose of killing weeds, etc., especially with a cultivator, as to cultivate the corn;
(2) to raise, or foster the growth of, by tillage or by labour and care; to produce by culture; as to cultivate roses; to cultivate oysters."
...
Whether the narrower or the wider sense of the term agriculture" should be adopted in a particular case depends not only upon the provisions of the various statutes in which the same occurs but also upon the facts and circumstances of each case. The definition of the term in one statute does not afford a guide to the construction of the same term in another statute and the sense in which the term has been understood in the several statutes does not necessarily throw any light on the manner in which the term should be understood generally. The decided cases disclose a variety of opinions in regard to the connotation of the terms "agriculture" and "agricultural purposes." At one time "agriculture" was understood in its primary sense of cultivation of field and that too for production of food crops for human beings and beasts. This limited interpretation could not be adhered to even though tilling of the land, sowing of the seeds, planting or similar work on the land were the basic operations, the scope of the crops produced was enlarged and all crops raised on the land, whether they be food crops or not were included in the produce raised by agriculture. There was however another school of thought which extended the term "agriculture" and included within its connotation not only the products raised by the cultivation of the land but also allied activities which had relation to the land and operations which had the effect of fostering the growth, preservation and maintenance as also the regeneration of the products of the land, thus bringing within its compass not only the basic agricultural operations but also the further operations performed on the products of the land even though they were not necessarily accompanied by these preliminary basic operations. As against these cases which dealt with these preliminary basic operations and also the further operations either by themselves or in conjunction with the former which of course necessarily involved the expenditure of human skill and labour in carrying out those operations, there were instances of products of land which grew wild or were of spontaneous growth without the expenditure of human skill and labour and which it was agreed on all hands could not be comprised within "agriculture" and the income from which could not fall within the definition of "agricultural income". We shall briefly discuss the various cases dealing with these different aspects and try to evolve some principle therefrom which would serve as a guide in the determination of the question before us.
A critical examination of the definition of "agricultural income" as given in s. 2(1) of the Indian Income tax Act and the relevant provisions of the several Agricultural Income- tax Acts of the various States also lends support to this position. In the first instance, it is defined as rent or revenue derived from land which is used for agricultural purposes; and it is next defined as income derived from such land by agriculture or by the activities described in cls. 2 and 3 of s. 2(1)(b) of the Act. These activities are postulated to be performed by the cultivator or receiver of rent-in-kind of such land in regard to the products raised or received by him which necessarily means the produce raised on the land either by himself or by the actual cultivator of the land who pays such rent-in-kind to him. If produce raised or received by the cultivator or receiver of rent-in-kind is thus made the subject- matter of cls. (ii) and (iii) in s. 2 (1)(b) of the Act, the term "agriculture" used in cl. (i) of s. 2(1)(b) must also be similarly restricted to the performance of the basic operations on the land and there is no scope for reading the term agriculture " in the still wider sense indicated above.
If the term " agriculture " is thus understood as comprising within its scope the basic as well as subsequent operations in the process of agriculture and the raising on the land of products which have some utility either for consumption or for trade and commerce, it will be seen that the term " agriculture " receives a wider interpretation both in regard to its operations as well as the results of the same'. Nevertheless there is present all throughout the basic idea that there must be at the bottom of it cultivation of land in the sense of tilling of the land, sowing of the seeds, planting, and similar work done on the land itself This basic conception is the essential sine qua non of any operation performed on the land constituting agricultural operation. If the basic operations are there, the rest of the operations found themselves upon the same. But if these basic operations are wanting the subsequent operations do not acquire the characteristic of agricultural operations. All these operations no doubt require the expenditure of human labour and skill but the human labour and skill spent in the performance of the basic operations only can be said to have been spent upon the land. The human labour and skill spent in the performance of subsequent operations cannot be said to have been spent on the land itself, though it may have the effect of preserving, fostering and regenerating the products of the land.
This distinction is not so important in cases where the agriculturist performs these operations as a part of his integrated activity in cultivation of the land. Where, however, the products of the land are of spontaneous growth, unassisted by human skill and labour, and human skill and labour are spent merely in fostering the growth, preservation and regeneration of such products of land, the question falls to be considered whether these subsequent operations performed by the agriculturist are agricultural operations and enjoy the characteristic of agricultural operations.' [Emphasis supplied]
6.2 In the case of Green Gold Tree Farmers (P.) Ltd. (supra), similar case wherein the assessee also used to carry on nursery business came up for consideration before the Uttarakhand High Court. The Uttarakhand High Court relying upon the decision of the Apex Court in the case of Raja Benoy Kumar Sahas Roy (supra) held that sale proceeds of the land belonging to the assessee constituted income from agriculture and hence should be exempted from tax under the Act. The relevant paragraphs are quoted as under:
'The terms "agriculture" and "agricultural purposes" not having been defined in the Indian Income-tax Act, but necessarily fall back upon the general sense in which they have been understood in common parlance. "Agriculture" in its root sense, means a gear, a field and cultivate, cultivation of field which of course implies expenditure of human skill and labour upon land. Turning to the dictionary meaning of "agriculture", Webster's New International Dictionary describing it as the art or science of cultivating the ground, including rearing and management of livestock husbandry farming, etc., and also including in its good sense farming, horticulture, forestry, butter and cheese making, etc. Murray's Oxford Dictionary describes it as the science and art of cultivating the soil, including the allied pursuits of gathering in the crop and rearing livestock, tillage, husbandly, farming in the widest sense. In Bouviers' Law Dictionary quoting the Standard Dictionary agriculture is defined as the cultivation of soil for food products or any other useful or valuable growths of the field of garden, tillage, husbandry, also by extension, farming, including any industry practised by cultivator of the soil in connection with such cultivation as breeding and rearing of stock, dairying, etc. The science that treats of the cultivation of the soil. In Corpus juris Secundum the term "agriculture" has been understood to mean, art or science of cultivating the ground, especially in fields of large quantities, including the preparation of soil, the planting of seeds, the raising and harvesting of crops, and the rearing, feeding and management of livestock tillage, husbandry and farming. In its general sense, the word also includes gardening or horticulture. Century Dictionary and Anderson's Dictionary of Law : The primary meaning of 'agriculture' is the cultivation of the ground, and in its general sense, it is the cultivation of the ground for the purpose of procuring vegetables and fruits for the use of man and beast including gardening or horticulture and the raising or feeding of cattle and other stock. Wharton's Law Lexicon adopts the definition of agriculture, in 8 Edn. VII, C. 36. As including horticulture, forestry and the use of land for any purpose of husbandry, etc. In 10 Edn. VII, C8, Section 41, it was defined so as to include the use of land as meadow or pasture land or orchard or osier or woodland or for market gardens, nursery grounds, or allotments, etc. In 57 and 58 Vict C 30 Section 22, the term "agricultural property" was" defined so as to include agricultural land, pasture, and woodland, etc.
The hon'ble Supreme Court in a case CIT v. Raja Benoy Kumar Sahas Roy , has held that:
"the term 'agriculture' cannot be confined merely to the production of grain and food products for human beings and beasts but, must be understood as comprising all the products of the land which have some utility either for consumption or for trade and commerce and would also include forest products such as timber, sal and piyasal trees, casuarina plantations, tendu leaves, horranuts, etc. "
Therefore, on the facts of the case, as well as on the basis of the judicial pronouncements detailed above, we have no hesitation in holding that the sale proceeds of the land belonging to the assessee constitute income from agriculture, hence exempt from tax under the Income-tax Act.
We do not find any good ground to interfere with the findings recorded by the Income-tax Appellate Tribunal. The question of law framed in this reference is answered against the Revenue Department and in favour of the assessee.'
6.3 In the case of A.T. Parthasarathiah & Bros. (supra), the Mysore High Court has held as under:
'14. We have now to see which of these contentions is correct. Section 2(1)(b)(ii) reads : "Any income derived from land used for agricultural purposes by the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of re-in-kind to render the produce raised or received by him fit to taken to market."
5. The language of section 2(1)(b)(ii) does not appear to justify the contention of the revenue that for claiming the benefit of section 2(1)(b)(ii) the process employed by the assessee must be of such character as just to make the produce marketable. This interpretation ignores the words "ordinarily employed". The interpretation put by the learned counsel for the revenue about the true scope of section 2(1)(b)(ii) appears to us extremely narrow. The true test, according to us, is what is the process ordinarily employed by the cultivators of any particular locality to render the produce raised by them fit for market. The process adopted in one locality may not necessarily be adopted in another locality. In some places paddy as such is sold; yet in other places usually it is converted into rice, before it is sold. In other words, the "market" referred to in the provision is a ready and willing "market" where the produce has to be dumped.
6. Now we may proceed to examine the decided cases read at the time of the hearing. The first case read to us is Killing Valley Tea Co. Ltd. v. Secretary of State. The assessee therein was a grower of tea. Tea grown was made ready for marketing by employing certain mechanical process. The extra income earned as a result of the application of the mechanical process in question was claimed to be agricultural income. This is what Mookerjee, A. C.J. observed dealing with that contention :
"It appears to us to be clear from the respective cases just set out that the process in its entirety cannot be appropriately described as agriculture. The earlier part of the operation when the tea bush is planted and the young green leaf is selected and plucked may well be deemed to be agriculture. But the latter part of the process is really manufacture of tea, and cannot, without violence to language, be described as agriculture. Counsel for the company appreciated this difficulty and made an endeavour to bring the case under the second clause of the definition. That clause, in our opinion, cannot be applied to the case before us. The manufacture of tea as a marketable commodity from the green leaves cannot be held to be the performance by a cultivator of a process ordinarily employed by a cultivator to render the produce raised by him fit to be taken to market. The assertion of the company that the actual leaf of the tea plant is of no value as a marketable commodity must be taken with a qualification. The green leaf is not a marketable commodity for immediate use as an article of food, but is a marketable commodity to be manufactured by people who process the requisite machinery into tea fit for human consumption. We must further observe in view of the expression used in the definition, that the manufacturing process cannot properly be said to be employed to render the tea leaves fit to be taken into the market. The means employed for the cultivation and manufacture of tea are well known and are succinctly stated in an article on tea by Mr. John McEwan in volume 26 of the eleventh edition of the Encyclopedia Britannica; they are described in fuller detail in the standard works on cultivation and manufacture of tea by Lieut. Col E. Money and David Crole. There can be no doubt, in our opinion, that the entire process is a combination of agriculture and manufacture."'
6.4 Moreover, we find that the decision of the Madras High Court is directly on the issue involved in the present matters and the relevant paragraphs are reproduced hereunder:
'Our attention was then invited by learned counsel to the decision of the Supreme Court in the case of CIT v. Raja Benoy Rumor Sahas Roy [1957] 32 ITR 466, which is the leading case of "agriculture". It was held therein that agriculture in its primary sense denotes the cultivation of the field and is restricted to cultivation of the land in the strict sense of the term, meaning thereby tilling of the land, sowing of the seeds, planting and similar operations on the land and these are basic operations, which require the expenditure of human skill and labour upon the land itself. The apex court further held that besides the basic operations, the subsequent operations would also be comprehended within the terms of agriculture, and such subsequent operations are illustrated as weeding, digging the soil around the growth, removal of undesirable undergrowth and all operations which foster the growth and preservation of the same not only from insects and pests, but also from depradation, from outside, tending, pruning, cutting, harvesting and rendering the produce fit for the market, which would all be agricultural operations, when taken in conjunction with the basic operations.
All the products of the land, which have some utility either for consumption or for trade or commerce, if they are based on land, would be agricultural products. Here, it is not the case of the Revenue that without performing the basic operations, only the subsequent operations, as described in the decision of the apex court have been performed by the assessee. If the plants sold by the assessee in pots were the result of the basic operations on the land on expending human skill and labour thereon and it is only after the performance of the basic operations on the land, the resultant product grown or such part thereof as was suitable for being nurtured in a pot, was separated and placed in a pot and nurtured with water and by placing them in the green house or in shade and after performing several operations, such as weeding, watering, manuring, etc., they are made ready for sale as plants all these questions would be agricultural operations all this involves human skill and effort. Thus, the plants sold by the assessee in pots were the result of primary as well as subsequent operations comprehended within the term "agriculture" and they are clearly the products of agriculture.
So far as the seeds are concerned, we are surprised that, that question should have been raised at all by the Revenue, as it is not possible for the seeds to exist without the mother plants, and the mother plant, it is nobody's case, was not grown on land. It is also not the case of the Revenue that the seeds were the result of the wild growth and not on account of cultivation by the assessee. The seeds were clearly a product of agriculture and the income derived from the sale of seeds, was agricultural income.'
7. We have also gone through the decisions cited by learned advocates for the respondents. In the case of Namdhari seeds (P.) Ltd. (supra) the Karnataka High Court has held that the assessee neither had derivative interest in the land nor did it actually cultivate the land and that the entire reading of the terms of agreement would only indicate that the assessee was interested only to have healthy foundation seeds grown for the process of converting them to certified seeds and the entire income amounted to business income of the assessee.
7.1 In the case of H.H. Maharaja Vibhuti Narain Singh (supra) the Allahabad High Court has observed as under:
'In view of the exhaustive discussion by the Supreme Court of the criteria to be adopted in deciding whether an activity can be described as an agricultural operation or not, there is no need for use to go into this matter at length. It is true that there is no decision so far brought to our notice on the question whether the maintenance of a nursery is included within the scope of agriculture technically defined. It may be that applying the above-mentioned tests laid down by their Lordships of the Supreme Court, cases my arise in which a nursery may be maintained by a farmer as an aid or necessary adjunct to the primary process of agriculture carried on by him. But, usually nurseries are maintained and run as businesses quite independently of agriculture, and there may be no process carried on upon the land at all in running a nursery. There are, inter alia, two meanings of the term "nursery" given in the Oxford Dictionary which are relevant here. One of these is : "A piece of ground in which young plants or trees are reared until fit for transplantation". Another meaning given, which is not so common, is : "a collection of such plants". Any place where young plants are "reared" and kept is spoken of as a "nursery". The keeping and running of a nursery as a business does not generally involve the ordinary processes of cultivation in fields at all.
In the present case, we do not find any discussion of the type of nursery involved. Even if the keeping of a nursery necessarily means the use of some land and earth for the purposes of rearing plants, that would not by itself amount to carrying on a primary agricultural operation in the sense of cultivating fields. Moreover, plants or seeds are not considered "produce ready for the market" in the ordinary sense. We do not also know the facts upon which the income-tax authorities have treated the income from the nursery as income from a business. It is only clear that the materials before the agricultural income-tax authorities in the case before us were wholly insufficient to justify the conclusion that the income from the nursery was agricultural income. No facts which would give rise to an inference that there was a nursery were discussed. Perhaps the income-tax authorities went into the matter in more satisfactory manner before they determined the income from the nursery to be income from a business. However, we have not even got any order or judgment of the income-tax authorities before us. All we can say with certainty is that the materials before the agricultural income-tax authorities could not justify the conclusion that the income from the nursery in this case constituted agricultural income.'
8. Considering the decisions cited hereinabove, we come to the conclusion that a careful reading of the above clearly shows that unless the assessee has carried out the basic operations upon the land i.e., tilling of the land, sowing of the seeds planting, etc. requiring the expenditure of human skill and labour upon the land, it cannot be said that the income earned by the assessee is agricultural income. Further, it is also clear that subsequent operations would also be agricultural operations if taken in conjunction with basic operations. However, subsequent operations by itself would not be considered as agricultural operations. Hence, if any income is earned by carrying out the subsequent operations without carrying out the basic operations then such income would not be considered as agricultural income. The gist of the decisions cited hereinabove further declares that the nature of the product is irrelevant. The agricultural product would not only include products for sustenance of human being but also products of utility for a trade and commerce.
9. In the present case, the plants have been grown on land owned by the assessee. The assessee during the course of growing and nurturing the plants on the land carried out certain functions such as tilling the soil, weeding, watering, manuring etc and finally the plants are made ready for sale. It goes without saying that all this involves human skill and effort. When plants are established in the soil only then they are shifted in suitable containers or appropriate place in land.
10. The Madras High Court judgment in the case of Saundarya Nursery (supra) wherein on similar facts it was held as under :
"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,"
11. Once the assessee had shown that the agricultural operations were carried out then income from the sale of agricultural produce would amount to agricultural income. The judgment of Allahabad High Court in the case of H.H. Maharaja Vibhuti Narain Singh (supra) is distinguishable inasmuch as in that case necessary facts were not on the record for reaching a particular conclusion. In the said judgement the Bench referred to two types of nurseries-one which may be maintained by a farmer as an aid or necessary adjunct to the primary process of agriculture while the other one which may be maintained and run as a business quite independently of agriculture. After such discussion, they went on to mention that there was no discussion of the type of nursery involved. In view of the same, the answer to the question was given in negative. Hence, that case does not help the Revenue.
12. In fact in the case of H.H. Maharaja Vibhuti Narain Singh (supra) the Allahabad High Court has held that income from all nurseries cannot be considered as agricultural income. It would depend on the facts of each case and that if the nursery is maintained by carrying out basic operations and subsequent operations in pots are carried out in continuation of basic operations then income from such nursery would be agricultural income not liable to tax under Section 10 of the Act. However, if the nursery is maintained independently without resorting to basic operations on the land then income from such nursery would be liable to be included in the total income. Similarly, where a part of the activity of a nursery involves purchases and sales of the plants then profits arising from such tracing would also be assessable to tax.
13. Therefore on the facts of the case as well as on the basis of the judicial pronouncements detailed above, we have no hesitation in holding that the sale proceeds from the business of nursery carried on by the assessee constitute income from agriculture. Therefore the question of law framed in the reference and the tax appeal is answered against the Revenue and in favour of the assessee. Reference and appeal stand disposed of accordingly.