Post-discontinuance professional receipt not taxable as professional income under the deeming fiction applied by the Revenue

A receipt arising after discontinuance of a profession was held not assessable as professional income under the deeming fiction in section 176(4) of the Income-tax Act, 1961. The Calcutta HC followed its earlier view on the same point and accepted the assessee's position that a post-discontinuance receipt linked to the closed profession could not be brought to tax as professional income through the Revenue's invoked deeming provision. The reference was answered in favour of the assessee and against the Revenue.

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Issues: Whether the receipt of Rs. 21,866 could be assessed as professional income for the assessment year 1974-75 by invoking the deeming provision in section 176(4) of the Income-tax Act, 1961, after the assessee had discontinued his profession.

Analysis: The reference concerned a receipt earned in relation to a profession that had already been discontinued. The Tribunal had followed an earlier decision on the same point, and the Court applied the same view, holding that the receipt was not liable to be assessed as professional income under the deeming provision invoked by the Revenue.

Conclusion: The question was answered in the affirmative, in favour of the assessee, and against the Revenue.

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