Share allotment for promotion services is taxable income, not a gift, when made under a prior service arrangement.

Preference shares allotted under a prior arrangement for services in promoting and forming a company were treated as remuneration, not a personal gift or exempt casual receipt. The court reasoned that a receipt may be income even if described as a reward or gift when, in substance, it is given in consideration of work done. Because the allotment was bargained for as part of the promoter's and managing director's services, its value was taxable as income and the Tribunal's view that it was a gift was rejected.

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Issues: Whether the value of preference shares allotted to the assessee was a personal gift exempt from tax, or remuneration received in consideration of services rendered in promoting and forming the company and therefore taxable as income.

Analysis: The allotment arose from a prior agreement made before incorporation of the company, under which the shares were to be issued in consideration of the assessee's services in connection with the formation and promotion of the company, the conduct of its business, the expenditure incurred, and the devotion brought to the project. The arrangement was not an unsolicited testimonial based on personal esteem or the assessee's personal qualities. A single receipt may still be income, and an apparent gift can assume the character of income if it is in substance a reward for services. The facts showed that the assessee had bargained for the allotment as part of the arrangement for his work as promoter and managing director.

Conclusion: The value of the shares was taxable income and not a gift or exempt casual receipt.

Final Conclusion: The reference was answered against the assessee, and the Tribunal's view that the shares were a gift was rejected.

Ratio Decidendi: Where a share allotment is made under a prior enforceable arrangement in consideration of services rendered in promoting and forming a company, its value is remuneration and taxable income, even if described as a reward or gift.

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