Delhi ITAT: No Need to Maintain Books of Account for An Agriculturalist U/S 44AA to Claim Tax Exemption U/S 10(1)

The Delhi ITAT while granting exemption on agricultural income under section 10(1) ruled that the taxpayer being an agriculturalist would not need to maintain books of account as per Sec 44AA.

Section 44AA of the Income Tax Act deals with the maintenance of books of accounts by specific persons maintaining on business or profession.

Single Bench of S. Rifaur Rahman (Accountant Member) discovering the regularity and consistency of the shown income of agriculture over the years and the forthcoming assessment years, remarked the income of the taxpayer from agriculture falls under section 10(1).

Agricultural income from land situated in India is entitled to tax exemptions under the norms of section 10(1) of the Income Tax Act.

Case Facts

The taxpayer furnished his return showing an income of Rs 8,61,560. AO in the e-proceedings noted that the taxpayer does not have the salary income from Pahuja Seeds Pvt Ltd. as a Director, income from house property, and income from other sources. It was noted by AO that the taxpayer has declared the agricultural income of Rs 23,36,957 under section 2(1A) and claimed it as waived under section 10(1).

Therefore the taxpayer has claimed the tax rebate on the income of agriculture of Rs. 6,01,097. No expenses for agricultural income were claimed by the taxpayer AO noted.

The taxpayers have provided a holding copy of the agricultural land at distinct places and provided the copy of bills of the sale of the agricultural produce to the individuals majorly his pertinent parties.

In pursuance to the inadequate explanation, the declared agricultural income by the taxpayer was not permitted.

Tribunal Observations

It was remarked by the bench that the AO remarked from the data furnished via the taxpayer that the taxpayer has not claimed any expenses for earning the income from agriculture.

AO rejected the taxpayer’s submissions remarking that the taxpayer does not provide any reasonable explanation and calculation of the agricultural income including with the books of account kept for the agricultural measures, Bench noted.

The bench discovered that the taxpayer graduated in agricultural science from Agricultural University, Ludhiana and he is in the vegetable seeds business.

The Bench additionally determined that the assessee possesses agricultural land in various locations, and the sales information was also presented to the Assessing Officer (AO).

The Bench from the facts on record remarked that the income shown by the taxpayer from AY 2016-17 to 2023-24 was within the range of Rs.33 lakhs to Rs.38 lakh per annum, without claiming any expenditure.

The Bench observed that the AO raised concerns regarding the agricultural income since the assessee did not report any expenses in the income return.

The assessee provided copies of sales bills for agricultural produce to several individuals, including those related to them, the Bench noted.

The Bench noted that the taxpayer’s claim is genuine as he has submitted that the agricultural expenses were fulfilled from the sale of seedlings to farmers, which is acceptable.

Consequently, indicating that no reason is there to doubt the income declared by the taxpayer, Assessee’s appeal has been permitted by Delhi ITAT.