TaxTMI 
TaxTMI 
1992 (6) TMI 63
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....153. During the reassessment proceedings the Assessing Officer noticed that the assessee received a sum of Rs. 21 lakhs as under, from his employers Shri K. P. Gupta and Shri M. P. Gupta, residents ofIndorefor helping them to get nearly Rs. 2 crores by way of compensation for their land acquired by the Government : Amount Date Rs. 1,00,0008th May, 1986 Rs. 15,00,0008th August, 1986 Rs. 5,00,00015th October, 1986. Therefore, a notice was issued calling upon the assessee to explain as to why this income should not be added as income from other sources. 4. It will be pertinent to mention here that the assessee was an employee of Shri K.P. Gupta and Shri M.P. Gupta on a monthly salary of Rs. 500. The assessee undertook to help his employers to get enhanced compensation of their land acquired under the Delhi Reforms and Land Acquisition Act. The employers of the assessee executed General Power of Attorney for the purpose of claiming compensation in favour of the assessee since they were residing atIndoreand they could not look after the case proceedings atDelhipersonally. The assessee produced documents and other evidence before the Court for claiming enhanced compensa....
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....o October 1986 whereas the alleged gift deed was executed on24-6-1987which fell even subsequent to the close of the relevant previous year. The Assessing Officer also observed that in order to qualify for a gift, the payment should be voluntarily. But the statement of the assessee recorded under section 131 on21-2-1990by the ITO, Ward-IV(4) shows that this amount was received in consideration of services rendered and it is not a voluntary gift. In view of this, the Assessing Officer concluded that the amount received by the assessee Rs. 21 lakhs was in the nature of commission, thereby an income from other sources. So he added the same as income from other sources. 5. When the matter came before the CIT (Appeals), he also concurred with the findings given by the Assessing Officer. The assessee is aggrieved. 6. The learned counsel for the assessee Shri C. S. Aggarwal pointed out that the assessee and his forefathers were loyal to S/Shri K.P. Gupta & M.P. Gupta and their families. They were virtually bonded labourers of these employers. The assessee's father and brother rendered services to these employers for more than 30 years. The gift was given to the assessee by employers ....
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....tement in a way to support his findings. Therefore, in the interest of justice also, this statement is useless. Reliance was placed on the following decisions :-- (1) Mahesh Anantrai Pattani v. CIT [ 1961] 41 ITR 481 (SC) ; (2) Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532 (SC) ; (3) H.E.H. Nizam s Religious Endowment Trust v. CIT [1966] 59 ITR 582 (SC) ; (4) Sewal Singh Ajit Singh v. CIT [1980] 126 ITR 732 (Punj. & Har.) ; (5) Siddhartha Publications (P.) Ltd. v. CIT [1981] 129 ITR 603 (Delhi) ; (6) CIT v. Dr. B.M. Sundaravadanam [1984] 148 ITR 333 (Mad.) ; and (7) CIT v. Shri Girdharram Hariram Bhagat [1985] 154 ITR 10 (Guj.). As against this, the learned Departmental Representative Shri S. P. Jain pointed out that these gifts were made by S/Shri K.P. Gupta & M.P. Gupta in their individual capacities which is clear from the assessment orders of Gift-tax mentioned above. Therefore, it is wrong to say that these gifts were made by the HUFs of these persons. It was pointed out that the assessee was in service of S/Shri K.P.Gupta & M.P. Gupta. During the employment of these persons, he was entrusted with the job of looking after court cases in respect of ....
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....ceipt but converse to it that every receipt is an income is not true. Income has been defined in section. 2(24) of the Income-tax Act which includes profits and gains, value of perquisite or profit in lieu of salary, special allowances, commission etc. Section 5 is a charging section. It says that the total income of any previous year of a person who is a resident includes all income from whatever source derived, shall be taxable. The Income-tax Act by sections 3 & 4 of the Act imposes general liability to tax upon all income but the Act does not provide that whatever received by the person must be regarded as income liable to tax. In all cases in which a receipt is sought to be taxed as income, the burden lies upon the department to prove that it is within the taxing provisions. Where however a receipt is of the nature of income, the burden of proving that it is not taxable, because it falls within an exemption provided by the Act, lies upon the assessee. In the case of H. E. H. Nizam's Religious Endowment Trust, the Hon'ble Supreme Court laid down that it is a settled law that the burden is on the revenue authorities to show that the income is liable to tax under the statute ; bu....
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....rtue of his office or employment but a gift to him as an Individual paid and received by reason of his personal needs or by reason of his personal qualities." Similar view was taken in the case of S.A. Ramakrishnan v. CIT [1978] 114 ITR 253 (Mad.). In the case of Parimisetti Seetharamamma a gift was made by the Maharani of Baroda to Seetharamamma who claimed that she was the private Secretary to Maharani. The question arose whether the said receipt was a taxable receipt. The Tribunal has held that all the evidence in support of her contention that the gift from the Maharani did not constitute her income and held that the gifts were remuneration for the services rendered or to be rendered. The Supreme Court was of the opinion that the Tribunal had wrongly placed the burden to prove on the assessee. The facts in the case did not establish that what the Maharani gave to the assessee was remuneration for the services rendered or to be rendered. Therefore, the gift was not taxable. The Hon'ble Supreme Court has observed as under :-- " Where the case of the assessee is that a receipt did not fall within the taxing provision, the source of the receipt is disclosed by the assessee an....
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....any legal right to receive the said remuneration. In the absence of that it was only because of love and affection with Shri Sewal Singh in view of his honest and faithful conduct, that the gift in question was made. 8. In the case of Siddhrartha Publications (P.) Ltd. the facts were that the assessee-company which was publishing an English magazine approached the "World partnership" organization for financial assistance as the magazine run by it suffered from indifferent quality because it was unable to pay adequately to its writers, that the assessee was keen to give a brighter look to the magazine by improving its format and layout and also help the contributors and that the organization should create bulk subscriptions for the magazine. The organization contributed a sum of Rs. 28,342 to the assessee but expressed their inability to follow up the suggestion of the assessee of either creating bulk subscriptions or increasing the amount of donation but hoped that the contribution would help in increasing the circulation and would put the magazine on a more economical footing. In these circumstances, the Delhi High Court treated the amount as donation and observed as under :-- ....
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....th the fact that it was a legal obligation on the part of the employer to pay the amount and it was also legal right of the assessee to receive the remuneration then even if it was a voluntary payment, it can be held that it is an income of the assessee. If none of these elements are present, then it cannot be said that the amount received was an income of the assessee. 10. Applying the principle laid down to the facts of the present case, we have to examine whether the impugned receipt can be categorised as an income of the assessee or it is a pure and simple case of gift. From the facts on record and from the assessment order it is clear that the amount was given by S/Shri K. P. Gupta and M.P. Gupta in their individual capacity. This is further clear from the plea of the assessee where he has mentioned that in fact gift was out of personal saving accounts of donors in their individual capacities. Therefore, there is no substance that this amount was given by HUFs. This controversy becomes less important when the department has assessed the individuals for gift-tax vide Gift-tax assessment orders dated30-3-1989. The fact remains that the assessee received Rs. 21 lakhs from thes....
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....unt received had no connection with the services rendered to get enhanced compensation. It was only a gift given to him subsequent to the receipt of the compensation by these persons. He has further said that he did work sincerely just like a family member in their interest. Therefore, it cannot be assumed that the amount received by the assessee was in consideration of services rendered to get enhanced compensation. Further we find that the assessee had no expectation to receive this income. The assessee certainly put efforts to adduce evidence and other documents to help his masters for expeditious disposal of court cases and to get enhanced compensation. But there was no efforts put by him to earn this amount because there was no agreement which says so. Thus, there was no expectations or efforts on behalf of the assessee to earn this income. In the absence of these two ingredients also the amount received cannot be termed as income at the hands of the assessee. It will be pertinent to mention here that the enhanced compensation received by S/Shri K.P. Gupta & M.P. Gupta between July 1985 to August 1986 whereas the assessee received the impugned amount between May 1986 to Octobe....