Update

Assessee filed a return declaring agricultural income as exempt. He filed MOU entered with Cultivator who paid him lease rent and said rent was shown by him as exempt. AO rejected claim as Inspector report showed that no irrigation was done on land and treated the amount as cash credit and taxed the same In appeal the Mumbai ITAT held

1. Land was agricultural land and same was leased out to cultivator to carry out agricultural activities since so many years as evident from revenue records Hence income received from leasing of agricultural land is also agricultural income

2. Since land was leased out , there was no need to maintain bills , vouchers etc to prove that agricultural activities were carried out

3. Section 2(1A)(a) also supports the assesses claim that rent or revenue derived from land used for agricultural purposes is also agricultural income

Addition made was deleted and Income held as exempt

Radhey Shyam Agarwal
Order dt 21/1/2021