TaxTMI 
TaxTMI 
2015 (4) TMI 229
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....e receipt of Rs. 1 lakh by the appellant as an award given to him by B. D. Goenka Foundation for his excellence in journalism was in the nature of income liable to tax in the hands of the assessee. 2. Whether on the facts and in the circumstances of the case the ITAT was right in holding that the receipt of the amount of Rs. 1 lakh by way of an award from B. D. Goenka Foundation was taxable as assessee‟s income as the said institution was not covered by section 10(17A) of the I.T. Act." 3. The brief facts are that the appellant at the relevant time was Editor in Chief of the English magazine i.e. India Today. According to him, he derived income from salary, interest, dividend and property. He filed return for the previous year relevant to the assessment year 1991-92 declaring an income of Rs. 5,47,190/-. The return was accompanied by financial statement of accounts. From the assessment order it is observed that while perusing the details given in the return, the Assessing Officer noted, the assessee had claimed an exemption for sum of Rs. 1 lakh received by him as B. D. Goenka Award for excellence in Journalism. During the proceedings, the assessee counsel‟s attention....
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....mponent in the hands of the appellant and therefore its inclusion in the total income is not justified and the same is accordingly deleted from the total income as computed in the impugned order. The appellant will accordingly be entitled to a consequential relief of Rs. 1 lakh." 6. On an appeal by the Revenue, the Tribunal vide a detailed order, allowed the same by holding that the initial onus is on the assessee to show that the particular receipt is exempt from tax. The Tribunal held the amount of Rs. 1 lakh as an income. It was also the argument of the appellant assessee that for being an income there must be „expectation and regularity‟. In other words, it was the case of appellant assessee that for a receipt to be an income, criteria is „expectation and regularity‟. The said argument was rejected by the Tribunal relying upon Section 10(3) (since repealed) of the Act which stipulated even casual and non-recurring receipts where the aforesaid two criteria namely „expectation and regularity‟ were absent, to hold that the law does not stipulate total exemption but only upto Rs. 5,000/- and which was reduced to Rs. 2,500/- where the receipt rep....
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....(24) is an inclusive definition. Even if a receipt does not fall within the ambit of any of the sub-clauses in Section 2(24), it may still be income if it partakes the nature of the income. The idea behind providing an inclusive definition in Section 2(24) is not to limit its meaning but to widen its net. The word "income" is of the widest amplitude, and that it must be given its natural and grammatical meaning. He would further submit that this Court in the case Commissioner of Income Tax vs. J. C. Malhotra (1998) 230 ITR 361 (Del.) following the view taken by Patna High Court in CIT vs. S. N. Singh, ITO (1991) 192 ITR 306 (Pat.) held that the reward to the assessee, that was given by the Central Government directly in connection with the Voluntary Disclosure Scheme to an Income Tax Officer was income. A separate approval of the Central Government for the purpose of exemption under Section 10(17B) of the Act was not given. That being the position, protection under Sub-Section (17B) of Section 10 of the Act was not attracted and the reward was not liable to be excluded from the computation of the income. 9. Having heard learned counsel for the parties, insofar as the submission of....
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...., is income. Winnings by way of lotteries, including card games or games of any other sort, entertainment programmes on telephone or electronic mode, in which people compete or any other similar game, is also treated as income in terms of Clause (ix) to sub-section (24) to Section 2. Sums referred to in Clauses (v), (vi), (vii), (viib) and (ix) of sub-section (2) to Section 56 are income. Thus, certain categories of gifts are treated as income, but all gifts are not treated as income. The non- specified gifts are not income, being capital in nature. 12. Sub-section (24) to Section 2, therefore, adopts a dual approach; „income‟ means what would be included and is treated as income, and in addition certain specific/specified categories of receipts or earnings are to be treated or are deemed to be income. Nevertheless all receipts or incomings are not income and aren‟t exigible to tax. A capital receipt is not taxable income. 13. In the facts of the present case, Revenue does not rely upon Clauses (ii) to (xvii) of sub-section (24) to Section 2. What is relied upon is the general scope and ambit of the term „income‟ and the term „gains‟ used....
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.... The appellant has not been taxed for income in the form of „profits‟ and „gains‟ earned from profession. Assuming, that the appellant was carrying on vocation as a journalist or publisher, the issue raised is whether the prize money is a revenue receipt or a capital receipt. The other aspect is whether the prize money is taxable under the head "income from other source". 17. In Krishna Menon (P) vs. CIT, (1959) 35 ITR 48 (SC), the assessed, was a retired Inspector of Police, had extensively studied Vedantic philosophy and excelled in giving discourses on Vedantic thought. He had a number of disciples. On the question, whether the assessed was carrying on a business or a profession (including vocation), the Supreme Court observed that: "It is said that in order that an activity may be called a vocation for the purposes of the Act, it has to be shown that it was an organized activity and that it was indulged in with a motive of making profit; that as the appellant's activity in teaching Vedanta was neither organised nor performed with a view to making profit, he could not be said to be carrying on a vocation. It is said that as the word " vocation " has....
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....the money to pay it. " 19. Therefore voluntary payment made because of office or vocation would be taxable, but a voluntary payment made for reasons purely personal and unconnected with his office or vocation would not be taxable. 20. The Court also referred to the judgment delivered by Rowlatt, J. in Reed vs. Seymour (1926) 1 K.B. 588, wherein Rowlatt, J. while explicating the difference between personal gifts and remuneration paid, held that the former wouldn‟t be subjected to tax but the latter would be. 21. Reference was made to another decision in Blakiston v. Cooper 5 TC 347, wherein it was held that what was paid to the vicar was given to him due to his office and hence formed a part of profits accruing by reason of the office he held. 22. Reverting back to the case in question i.e. Krishna Menon (supra), it was held that imparting of teaching was the causa causans of making the gift and not merely a causa sine qua non. The payments were repeatedly and regularly made at certain intervals. Rejecting the contention of the assessed that payments ought to be treated as casual in nature, it was held that the question of exemption does not arise as the assessed was unequ....
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.... the fact that the amount involved was large or that it was periodic in character have no decisive bearing upon the matter. A payment may even be described as "pay", "remuneration", etc., but that does not determine its quality, though the name by which it has been called may be relevant in determining its true nature, because this gives an indication of how the person who paid the money and the person who received it viewed it in the first instance. The periodicity of the payment does not make the payment a recurring income because periodicity may be the result of convenience and not necessarily the result of the establishment of a source expected to be productive over a certain period. ... XXX Even if it be not regarded as a payment for loss of capital it cannot be regarded payment for any services rendered or likely to be rendered, The services in the past were amply remunerated. The payment does not contemplate that the agreement in the past had not been sufficiently remunerative to the firm. It does not pretended to pay them for past services. The minutes do not show that any services in the future was expected from these appellants. What remained to be done was to wind up t....
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....ehouse (Inspector of Taxes) v. Dooland, (1954) 36 TC 1, the Court went on to postulate three tests. Firstly, the litmus test for determining whether a voluntary payment would be exigible to tax has to be applied from the stand point of the recipient, by asking whether what has accrued to him is primarily and fundamentally by virtue of his office or employment; secondly whether the employment or office under consideration normally entails receipt of such voluntary payments; and lastly whether the said payments were periodic or recurring in character. The Court however held that payments which are quite ostensibly gifts would not be taxable, as they were mere testimonials and were made in recognition of the personal qualities of the recipient. 26. The Supreme Court in Parimisetti Seetharamamma vs. CIT, (1965) 57 ITR 532 (SC), dealt with a case where a substantial amount by way of cash and jewellery had been gifted by one of the members of a royal family of Baroda to a maid servant/secretary. The question that arose for the consideration of the Court was whether the said gifts were taxable as income. The Court held that the Act does not make a blanket provision whereby any and every ....
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....artnership firm. Subsequently, the company, it was claimed, had made unsolicited gift of 2500 shares to the assessee. The value of the shares, it was observed, could not be taxed as a perquisite or profits, as they were not a part of salary or wages. It was observed by the Court that the conclusive test to decide whether the shares could be said to be profits and gains arising out of a profession or vocation would be to ascertain, whether the same were a gift in the form of a testimonial in recognition of the personal qualities of the partners. The said test would be applied from the stand point of the recipient and it had to be first ascertained whether it accrued to him by virtue of his office and if it did, it is irrelevant whether it is voluntarily or compulsorily made on the part of the payer. If it was found to have any causal connection with the exercise of a profession or vocation, then it would not be treated as a gift arising out of personal admiration; rather the same would be treated as a payment having a correlation with the office held. In such a case, it would not be treated as one in appreciation of his personality or character. The Court recognized that money is ra....
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....th the issue, whether presents worth Rs. 19,242/-, received at the time of Grih Pravesh ceremony from relations, friends and well-wishers would be taxable. The issue was decided in favour of the assessee by observing that it was not something earned and the payments were merely a gift and a windfall. These were gifts of a voluntary or gratuitous nature, without any quid pro quo, which is a prerequisite to qualify anything as a gift. Thus, all what comes in is not income and gifts are not income. Gifts, it was observed, were the opposite of income as they are wind falls. They are not earned as such. Earned income comes from a definite source and it also possesses the other characteristic of recurrence. 34. Similarly in CIT vs. Sundaravadanam (B.M.)(Dr.), (1984) 148 ITR 333 (Mad.), gifts received by a professional doctor which was not towards his professional fee, were held to be not income. 35. In C.P. Chitrarasu vs. CIT, (1986) 160 ITR 534 (Mad.), gifts received by a member of a political party were not treated as income. 36. Again, there are decisions on the question whether gifts received by a singer etc. are personal in nature and hence exempt; or whether they are receipts in....
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.... where the assessed had income from various sources including salary and business. Earnings in the nature of prize money etc. for winning were held to be income. It was observed: "The idea behind providing inclusive definition in Section 2(24) is not to limit its meaning but to widen its net. This Court has repeatedly said that the word „income' is of widest amplitude, and that it must be given its natural and grammatical meaning. Judging from the above standpoint, the receipt concerned herein is also income. May be it is casual in nature but it is income nevertheless. That even the casual income is „income‟ is evident from Section 10(3). Section 10 seeks to exempt certain „incomes‟ from being included in the „total income‟. A casual receipt - which should mean, in the context, casual income - is liable to be included in the total income, if it is in excess of Rs. 1,000/-, by virtue of Clause (3) of Section 10. Even though it is a clause exempting a particular receipt/income to a limited extent, it is yet relevant on the meaning of the expression income. In our respectful opinion, the High Court, having found that the receipt in questi....
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.... amount would be a capital receipt, being purely in the nature of a testimonial. The causa causans in the present case is not directly relatable to the carrying on of vocation as a journalist or as a publisher. It is directly connected and linked with the personal achievements and personality of the person i.e. the appellant. Further, it is to be noted that the payment in this case was not of a periodical or repetitive nature. The payment was also not made by an employer; or by a person associated with the "vocation" being carried on by the appellant; or by a client of his. The prize money has in the instant case been paid by a third person, who was not concerned with the activities or associated with the "vocation" of the appellant. It being a payment of a personal nature, it should be treated as capital payment, being akin to or like a gift, which does not have any element of quid pro quo. The aforesaid prize money was paid to the assessee on a voluntary basis and was purely gratis. 42. On the concluding note we would like to deal with the alternative submission of the counsel for the Revenue that all prizes or awards in cash or kind would be income except those specifically cov....