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CHEQUE BOUNS CASE

The only issue in this appeal of the assessee is against assessment of agriculture income and balance treated as business income by the AO and thereafter by CIT(A).Even, the CIT(A) has ITA Nos.697/Ahd/2007 3 Dr. Homiyar Sorab Bilimoria accepted the same but estimated the income at 65% which comes to Rs.4,90,000/-. Similarly, as regards watermelon, the CIT(A) has accepted 65% and the balance was treated as professional income as the assessee could not substantiate the agriculture income through proper documentary evidences and he has clubbed this income with professional income by stating that the professional degree of the assessee is apparatus to earn income. W e find that this income cannot be clubbed with professional income as the authorities below have not brought out any evidence to show that this income is earned on account of profession. No doubt, the assessee has produced the sale bills of sugarcane from Sahkari Khand Udhyog Mandli Ltd. at Rs.10,54,671/- and also declared income from mango at Rs.1,95,000/- from 2.75 hectares of land. As regards the income from mango, there is no dispute between the assessee and the Revenue. The only dispute is as regards to estimation of income from sugarcane and income from watermelon. W e find that the Revenue could not attribute any managerial cost, interest cost and other administrative expenses. Accordingly, we are of the view that there are expenditures in respect of earning of agriculture income and that should be estimated at a fair rate. The assessee has not kept any accounts for the agriculture income but he has supporting sale bills and estimated agriculture income on account of watermelon. The assessee has grown sugarcane in 16.55 hectares of land instead accepted by the Revenue at 6.11. hectares of land. Further, we are of the view that the data of Navsari Agriculture University cannot be the basis for determining agriculture income as the assessee has sufficient evidence that he has earned agriculture income which is supported by sale bills. The assessee has also furnished Xerox copies of abstracts of 7/12 and 8A forms which provide that the assessee is owner of agriculture land and he has grown sugarcane, mango and watermelon and ITA Nos.697/Ahd/2007 4 Dr. Homiyar Sorab Bilimoria garmal. In view of the above facts, we feel that a reasonable disallowance of expenditure would meet the end of justice and we feel that reasonable disallowance of expenditure should be considered. Accordingly, we direct the AO to make disallowance of Rs.1,00,000/-. 5. In the result, appeal of the assessee allowed partly. The order was pronounced in the open court on 23-12-09

Dr. Homiyar Sorab Bilimoria, … vs Assessee on 23 December, 2009

IN THE INCOME TAX APPELLATE TRIBUNAL

‘B’ BENCH – AHMEDABAD

(BEFORE S/SHRI MAHAVIR SINGH, JM AND A. N. PAHUJA, AM)

ITA No. 697/Ahd/2007

A. Y.: 2003-04

Dr. Homiyar Sorab Bilimoria, Vs The Income Tax Officer, Rativila, Desra Road, Ward -2, Bilimora Rangpuja, Swapnalok Complex, PA No. AALPB 9678 A Near Kaliawadi Bridge, Navsari

(Appellant) (Respondent)

Appellant by Shri R. N. Vepari, AR Respondent by Smt. Neeta Shah, DR

Date of order preserved: 10/12/2009

ORDER

PER MAHAVIR SINGH: This appeal by the assessee is arising out of the order of the learned CIT(A), Valsad in Appeal No. CIT(A)/ VLS /64 /06-07 dated 29-11-2006. The assessment was framed by the ITO, Ward-2, Navsari u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act.”) for the assessment year 2003-04.

2. The only issue in this appeal of the assessee is against assessment of agriculture income and balance treated as business income by the AO and thereafter by CIT(A).

3. The brief facts of the case leading to the issue are that the assessee had declared agriculture income at Rs.11,11,765/-. The AO has accepted the agriculture income at Rs.5,67,355/- and the balance was estimated as business income at Rs.5,44,450/-. The CIT(A) made another estimate and accepted the net agriculture income at Rs.4,29,765/-. It is a fact that the assessee owns 22.75 Hectares of land and earns agriculture income by producing sugarcane, ITA Nos.697/Ahd/2007 2 Dr. Homiyar Sorab Bilimoria

mangoes and watermelon etc. The assessee has declared agriculture income on account of sugarcane at Rs.10,54,671/- which is supported by sale bills of Sahkari Khand Udhyog Mandli Ltd. and Patel Firm. The assessee has placed the sale bills in paper book at pages 26 to 34. The assessee has also sold mango produce at Rs.1,95,000/- and watermelon at Rs.1,00,000/-. The AO during the course of assessment proceedings after going through the data collected from Navsari Agriculture University has estimated the income earned per hectare for sugarcane at Rs.60,941/- and accordingly estimated income at Rs.3,72,350/-. Similarly, he has also estimated income from mango per hectare at Rs.80,387/- and therefore, estimated the income from mango from 2.47 hectares of land at Rs.2,13,277/- as against income declared by the assessee at Rs.1,95,000/- As regards to watermelon the AO has not accepted the income shown by the assessee by giving reasoning that watermelon cannot be cultivated beneath the mango trees. Accordingly, he estimated agriculture income. Aggrieved the assessee preferred appeal before the CIT(A). The CIT(A) further estimated the agriculture income at Rs.6,82,000/- by tabulating the estimation of income in Para 6 of his order as under: Particulars Rs. 65% of sale proceeds of Rs.7,54,471/- from sugarcane sold to 4,90,406/- Sahakari Khand Udhyog Mandli, Gandevi and Patel Farm, Manekpore(as per actual sales bills produced 65% of sale proceeds from mangoes 1,26,750/- 65% sales proceeds from watermelon 65,000/- Total Agricultural Income … 6,82,156/- Say

6,82,000/-

Aggrieved, the assessee came in appeal before us.

4. After hearing the rival submissions and going through the case records we find that the authorities below have not doubted the sale bills of sugarcane and accepted as it is. Even, the CIT(A) has ITA Nos.697/Ahd/2007 3 Dr. Homiyar Sorab Bilimoria

accepted the same but estimated the income at 65% which comes to Rs.4,90,000/-. Similarly, as regards watermelon, the CIT(A) has accepted 65% and the balance was treated as professional income as the assessee could not substantiate the agriculture income through proper documentary evidences and he has clubbed this income with professional income by stating that the professional degree of the assessee is apparatus to earn income. W e find that this income cannot be clubbed with professional income as the authorities below have not brought out any evidence to show that this income is earned on account of profession. No doubt, the assessee has produced the sale bills of sugarcane from Sahkari Khand Udhyog Mandli Ltd. at Rs.10,54,671/- and also declared income from mango at Rs.1,95,000/- from 2.75 hectares of land. As regards the income from mango, there is no dispute between the assessee and the Revenue. The only dispute is as regards to estimation of income from sugarcane and income from watermelon. W e find that the Revenue could not attribute any managerial cost, interest cost and other administrative expenses. Accordingly, we are of the view that there are expenditures in respect of earning of agriculture income and that should be estimated at a fair rate. The assessee has not kept any accounts for the agriculture income but he has supporting sale bills and estimated agriculture income on account of watermelon. The assessee has grown sugarcane in 16.55 hectares of land instead accepted by the Revenue at 6.11. hectares of land. Further, we are of the view that the data of Navsari Agriculture University cannot be the basis for determining agriculture income as the assessee has sufficient evidence that he has earned agriculture income which is supported by sale bills. The assessee has also furnished Xerox copies of abstracts of 7/12 and 8A forms which provide that the assessee is owner of agriculture land and he has grown sugarcane, mango and watermelon and ITA Nos.697/Ahd/2007 4 Dr. Homiyar Sorab Bilimoria

garmal. In view of the above facts, we feel that a reasonable disallowance of expenditure would meet the end of justice and we feel that reasonable disallowance of expenditure should be considered. Accordingly, we direct the AO to make disallowance of Rs.1,00,000/-.

5. In the result, appeal of the assessee allowed partly. The order was pronounced in the open court on 23-12-09

Sd/- Sd/- (A. N. PAHUJA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Date : 23 -12-09

Lakshmikant/-*DKP

Copy of the order forwarded to:

1. The Appellant

2. The Respondent

3. The CIT concerned

4. The CIT(A)

5. The DR, ITAT, Ahmedabad

6. Guard File

/True copy/

BY ORDER

Dy. Registrar, ITAT, Ahmedabad

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