Income from Sale of White Button Mushroom Cultivated Indoors is still “Agricultural Income”, not “Business Income”: ITAT

The Income Tax Appellate Tribunal (ITAT) in Mumbai ruled that income from the sale of white button mushrooms cultivated indoors should be classified as “agricultural income” under Section 10(1) of the Income Tax Act, exempting it from income tax. The assessee, Fresh Bowl Horticulture Pvt. Ltd., cultivated mushrooms in a controlled environment and claimed the income as agricultural. The Assessing Officer (AO) reclassified it as business income, arguing that indoor cultivation did not meet the criteria for agricultural income. However, the ITAT held that the cultivation process, which involved preparing a soil substrate and using organic materials, aligned with agricultural operations. The tribunal emphasized that the method of cultivation did not alter the nature of the income. This ruling provides clarity on the classification of income from non-traditional agricultural activities and supports taxpayers in claiming exemptions for similar operations.