1999 (3) TMI 117 - AT - Income Tax

Cine Actor's Gift from Fans Not Taxable

The Tribunal, in the case concerning a cine actor's receipt of Rs. 2.07 lakhs from Fans' Association, ruled that the amount was not taxable as ... Income, Business Income Issues:1. Whether the amount received by the assessee from relatives, friends, and fans for buying a house is to be considered as professional receipts for taxation purposes.Analysis:The appeal before the Appellate Tribunal ITAT Madras-B relates to the assessment year 1990-91 concerning an assessee who is a cine actor. The primary issue revolves around the categorization of a sum of Rs. 2.07 lakhs received by the assessee from various sources as professional receipts or non-taxable gifts. The Assessing Officer treated this amount as professional receipts, linking it to the professional activities of the assessee, specifically his acting in a particular film. The CIT (Appeals) upheld this decision, leading to the appeal before the Tribunal.Upon careful consideration, the Tribunal emphasized that for a receipt to be taxable, it must be proven as income under the Income-tax Act. The nature of the receipt determines its taxability, as not all receipts can be deemed as income. In this case, the Tribunal noted that the amount received was a voluntary contribution from the Fans' Association during a film celebration event. It was not a regular or expected income source for the assessee, but rather a gesture of appreciation for his professional services as an artiste. The Tribunal concluded that since the payment was voluntary and not a professional receipt, it did not qualify as taxable income under the Income-tax Act.Regarding legal precedents cited by the Departmental Representative, the Tribunal distinguished the facts of those cases from the present scenario. For instance, in the case of David Mitchell, a gift was given in appreciation of professional services rendered, unlike the voluntary contribution received by the assessee in this case. Similarly, the Tribunal differentiated the case of Maharaj Shri Govindlalji Ranchhodlalji, where gifts were linked to holding a specific religious office, which was not applicable to the cine actor's situation. The Tribunal also discussed the Supreme Court's decision in P. Krishna Menon's case, highlighting the relevance of services rendered in exchange for gifts, which was absent in the current matter.Furthermore, the Tribunal analyzed the applicability of section 28(iv) of the Income-tax Act, which pertains to benefits or perquisites arising from business or profession. It clarified that the cash gift received by the assessee from the Fans' Association did not fall under this section as it was not directly related to the professional services rendered by the assessee. Therefore, the Tribunal allowed the appeal, ruling in favor of the assessee and concluding that the amount of Rs. 2.07 lakhs was not taxable as professional receipts.In conclusion, the Tribunal's judgment focused on the voluntary nature of the contribution, the absence of a direct professional link, and the legal interpretations of relevant sections and precedents to determine the non-taxable status of the amount received by the cine actor.