Taxability of office-linked allowance and institutional household benefits turns on revenue receipt versus money or money's worth.

A payment received in virtue of an office is taxable as income where it accrues periodically and represents revenue receipt rather than capital, so the monthly allowance set apart for the Acharya's personal use was taxable. By contrast, benefits provided directly by the institution for residence, food, clothing and servants were not taxable in the assessee's hands because they were not money or money's worth and did not discharge any personal pecuniary obligation. The distinction drawn is between income arising from office and non-monetary institutional support, with taxability depending on whether the receipt can be treated as pecuniary income.

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Issues: (i) Whether the monthly sum of Rs. 2,000 set apart for the Acharya's personal use under the scheme was taxable as income of the assessee. (ii) Whether the expenses incurred out of the institution's funds for residence, food, clothing and servants were includible in the assessee's income.

Issue (i): Whether the monthly sum of Rs. 2,000 set apart for the Acharya's personal use under the scheme was taxable as income of the assessee.

Analysis: The allowance was received by reason of the office of Acharya and accrued periodically in that capacity. It was a revenue receipt in substitution of Nam Vero and Bhets, which themselves were referable to the office and had become part of the institution's revenues under the scheme. A payment received in virtue of office is taxable income, even if it is described as voluntary or is paid under a legal arrangement. The receipt was therefore not capital in character.

Conclusion: The sum of Rs. 2,000 per month was taxable as income of the assessee, and this issue was decided against the assessee.

Issue (ii): Whether the expenses incurred out of the institution's funds for residence, food, clothing and servants were includible in the assessee's income.

Analysis: Taxable income must be money or money's worth, that is, something capable of being turned into pecuniary account. The household benefits were not a discharge of any personal pecuniary liability of the assessee; they were obligations of the institution itself, imposed by the scheme in order to maintain the Acharya and his household. The benefit was therefore not convertible into money and did not amount to income in the assessee's hands.

Conclusion: The household expenses were not includible in the assessee's income, and this issue was decided in favour of the assessee.

Final Conclusion: The reference was answered by holding the monthly allowance taxable, but the household expenditure not taxable, leaving each party to bear its own costs.

Ratio Decidendi: A receipt arising from an office is taxable as income where it is received in virtue of that office as revenue income, but benefits provided directly by an institution are not taxable unless they represent money or money's worth or discharge a personal pecuniary obligation of the recipient.

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