Tribunal rules in favor of assessee, recognizing practical experience as technical qualification

TRS. NARAYAN. Versus INCOME TAX OFFICER.

TRS. NARAYAN. Versus INCOME TAX OFFICER. - TTJ 010, 170, Issues:
Inclusion of salary amounts in the total income of the assessee under section 64(1)(ii) of the Income Tax Act, 1961.

Detailed Analysis:

1. Issue of Inclusion of Salary Amounts:
The appeals filed by the assessee contested the inclusion of Rs. 9,600 and Rs. 16,800 in the total income for the assessment years 1977-78 and 1978-79 under section 64(1)(ii) of the Income Tax Act, 1961. The assessee, engaged in the textile machinery business, paid a salary to her husband, who was not technically qualified but had extensive experience in the field. The Income Tax Officer (ITO) added the salary amounts to the assessee's income, stating that the proviso to section 64(1)(ii) did not apply. The Appellate Authority Commissioner (AAC) upheld this decision. The core argument revolved around whether technical qualification, as per the proviso, only referred to academic qualifications.

2. Interpretation of Technical Qualification:
The representative for the assessee argued that the husband's 25 years of experience in the field constituted a qualification for the job, as supported by a certificate from his previous employer. The departmental representative contended that technical qualification in section 64(1)(ii) referred solely to academic qualifications. Reference was made to a previous Tribunal order where it was held that technical or professional qualification could be acquired through practical experience, not just academic degrees. The Tribunal emphasized that the term "qualification" denotes the necessary equipment for a job, which can vary from academic qualifications to practical experience.

3. Precedent and Application of Proviso:
The Tribunal referred to a previous case where the Tribunal ruled in favor of the assessee, stating that technical or professional qualifications could be acquired through practical experience and not limited to academic degrees. In the present case, the husband's extensive experience in the textile field was deemed as fulfilling the requirements of the proviso to section 64(1)(ii). The Tribunal held that the remuneration paid to him was solely attributable to his technical qualification, knowledge, and experience, thereby excluding the salary amounts from the assessee's total income under section 64(1)(ii) for both years under appeal.

4. Conclusion:
The Tribunal concurred with the reasoning of the previous order, confirming that technical or professional qualifications encompass practical experience, not just academic degrees. In the instant case, the husband's rich experience in the textile field qualified as a technical qualification under the proviso to section 64(1)(ii). Consequently, the Tribunal deleted the additions of the salary amounts from the assessee's total income for the respective assessment years, thereby allowing the appeals filed by the assessee.

By analyzing the issues and the Tribunal's detailed reasoning, it is evident that the interpretation of technical qualification under section 64(1)(ii) was pivotal in determining the inclusion of salary amounts in the assessee's total income, emphasizing the significance of practical experience as a qualifying factor.