21 December 2010
Income from fishing is taxable to an individual. However the same is exempt to Co-operative society. Below is the Case law:
KARRA JAYABHYARATHI vs. INCOME TAX OFFICER ITAT, HYDERABAD ‘B’ (SMC) BENCH D. Manmohan, J.M. ITA No. 48/Hyd/2004 31st May, 2005 (2006) 100 TTJ (Hyd) 257 : (2005) 96 ITD 414 (Hyd) Section 2(1A), Asst. Year 2002-03 Decision in favour of Revenue Counsel appeared : R.V. Seshaiah Naidu, for the Appellant : K. Hariprasada Rao, for the Respondent Order D. MANMOHAN, J.M. : This appeal by the assessee is directed against the order dt. 14th Nov., 2003 passed by the CIT(A), Guntur, and it pertains to the asst. yr. 2002-03. During the previous year relevant to the year under consideration, the assessee earned income from prawn culture, and the same was claimed as agricultural income and, therefore, exempt from tax. The AO as well as the learned CIT(A) rejected the contention of the assessee, and thus, the assessee is in appeal before the Tribunal. The learned counsel appearing on behalf of the assessee strongly submitted that the income earned by the assessee satisfies the conditions laid down under s. 2(1A) of the Act inasmuch as the assessee has used the agricultural lands, conducted basic operations, such as digging the land, watering the land, sowing the seeds (prawn seeds) and obtained yield from out of such basic operations, and thus, it has to be treated as agricultural income. In this regard, he relied upon the definition of "agricultural produce" given under the Agricultural Produce Act, 1937. He has also relied upon the decisions purported to have been in Karimtharuvi Tea Estate Ltd. vs. State of Kerala (1966) 60 ITR 262 (SC) and 120 ITR 621 (sic). On the other hand, the learned Departmental Representative relied upon the orders of the tax authorities, and contended that growing prawns has different nomenclature, which is known as prawn culture, which is different from agriculture, and thus, it would not fall within the definition of agricultural income under s. 2(1A) of the Act. I have carefully considered the rival submissions and perused the records. The learned counsel mentioned in the written submissions that he is relying upon a decision in 120 ITR 621 (sic) whereas it is noticed that there is no such case-law relevant to the issue on hand on such page number. Similarly, Karimtharuvi Tea Estate Ltd.’s case (supra) is on the issue of levy of agricultural income-tax and it has no bearing on the issue involved in the present appeal. The learned counsel also placed reliance upon the definition given in the Agricultural Produce Act, 1937 with regard to the term ‘agricultural produce’. However, it has to be borne in mind that IT Act is a separate code and thus the definition given under s. 2(1A) should alone be taken into consideration for the purpose of appreciating as to whether the impugned income falls within the definition or not. Sec. 2 (1A)(a) defines ‘agricultural income’ as ‘any rent or revenue derived from land, which is situated in India and is used for agricultural purposes’. Identical issue has come up before the Hon’ble Madras High Court in the year 1932, wherein Bench observed that income derived from the fisheries is not exempt from the assessment from incometax, since it cannot be treated as agricultural income. The Court observed that such income cannot be treated as rent or revenue derived from the land used for agricultural purposes. The decision of the Hon’ble Madras High Court, prior to formation of separate State of Andhra Pradesh, has to be treated as a decision of the jurisdictional High Court, and thus, it is binding on the subordinate Courts falling within the jurisdiction. Thus, for historical reason, the judgment of the Hon’ble Madras High Court in that case is binding on this Bench. Chief Justice Beasley referred to the Hon’ble Calcutta High Court judgment in the case of Emperor vs. Probhat Chandra Barua 1 ITC 284 and the Hon’ble Patna High Court judgment in the case of Maharajadhiraj of Darbhanga vs. CIT (1924) ILR 3 Pat 470 and quoted with approval the aforesaid judgments to hold that the income from fisheries cannot be treated as agricultural income. The other two Judges constituting the Bench have passed separate but concurring judgments. Justice Ananta Krishna Ayyar observed in CIT vs. V.T.S. Sevuga Pandia Thevar (1933) 1 ITR 78 (Mad) at p. 89 as under : "The word ‘agriculture’ even in its widest import, has received some sort of definite and restricted meaning, and I find it difficult to bring fishery under the heading ‘agriculture’ even in its widest sense as ordinarily understood." Justice Cornish while concurring with the view of the Chief Justice observed that the use of a tank as a fishery is not use of land for agricultural purpose. In view of the above, income derived from fishing over land covered by water and which is not used for any agricultural purpose cannot be treated as income from agriculture inasmuch as fish cannot be treated as the produce of the land, since their element is water and, therefore, their cultivation and welfare depend in no sense upon agriculture. The learned counsel could not show any direct decision on this aspect, contrary to the view taken in the case law noted above. Under the circumstances, I do not find any infirmity in the order of the learned CIT(A), and accordingly dismiss the appeal filed by the assessee. In the result, assessee’s appeal is dismissed.
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