AI Drafter 
TaxTMI 
TaxTMI 
2015 (5) TMI 188
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....standing dues from his past clients. Such amounts for the previous year relevant to A.Y. 1996-97 is Rs. 4,52,277/- and for A.Y. 1998-99 is Rs. 13,93,630/-. The assessee in his returns of income for both the years has claimed these amounts as non-taxable relying on the judgments in the case of CIT vs. Justice R.M. Dutta of Calcutta High Court and Justice Kuldeep Singh vs. ITO, ITAT, Chandigarh Bench. In the assessment order, the assessing officer distinguished the above referred cases and placed reliance on the decision in the case of V. Pattabhiraman v. Addl. CIT (1976) (A.P.) in favour of the department. The Assessing Officer also referred to the intention of the legislature leading to introduction of section 176 in Income Tax Act, 1961 as an amendment to section 25 in I.T. Act, 1922. It was concluded that the amount received after discontinuation of legal profession is taxable under the head 'Income from business or professions'. These amounts were added to the total income in the respective years as per the provisions contained in Section 176(4) of the Income Tax Act, 1961. [B] In A.Y. 1996-97, in appeal filed by the assessee, CIT(A) deleted the addition made by th....
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....come of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the aforesaid person had it been received before such discontinuance." Section 4 of the Income Tax Act reads as under :- Charge of income-tax. "4. (1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and [subject to the provisions (including provisions for the levy of additional income-tax) of, this Act] in respect of the total income of the previous year of every person : Provided that where by virtue of any provision of this Act incometax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly." 5. The Assessing Officer distinguished the judgment in the case of Justice Kuldeep Singh V/s. ITO 46 ITD 251 (Chandighar). However, in Paragraph 4.2, he held as follows:- "Section 176(4)of the Income-tax Act, 1961-Discontinued business- Assessment years 1990-91 and 1991- 92- before his elevation as Supreme Court Judge on 14....
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....atute fail, then so must be tax. The Calcutta High Court has simply shown in its judgment in the case of Justice R.M. Datta (Supra) that the words of section 176(4) do fail in as much as all the three fictions necessary for bringing such arrears of professional fees to tax are not there; section 176(4) gets only two cheers and is deficient in the third one. "There was merit in the submissions that if a taxing provision is ambiguous and is reasonable capable of more than one interpretation, that interpretation which is beneficial to the subject must be adopted. Even if it was assumed that the interpretation suggested by the revenue was a reasonable interpretation, still the matter had to be decided in favour of the assessee because if a provision of a statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee has got to be accepted. The position of law is now well settled. "Thus, the revenue authorities were not justified in bringing to tax the arrears of professional receipts in the hands of assessee after he had discontinued his legal profession which he was elevated to the Supreme Court on 14-12-1988". 3. In view of the dec....
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....ther High Court, the decision of any High Court territorial or otherwise should be accepted, does not find favour in the case of the assessee. The A.O. has also gone through the decision of ITAT in the case of Justice Kuldip Singh Vs. ITO, decided by the ITAT, Chandigarh Bench, the A.O. observed that when decision of various High Court are being relied upon in this matter with due respect to, the decision of Hon'ble ITAT, the same need not require consideration as the issue involved is the question of law and interpretation of various provisions of Act. The A.O. was of the view that such income is chargeable to tax due to following reasons : i) The judgment of the Calcutta High Court is not the only judgment on this issue. Judgment of A.P. High Court is contrary to judgment of Calcutta High Court. ii) There is no binding judgment of Gujarat High Court on this issue. iii) The intention of the legislature was clearly to tax income from discontinued profession. iv) Section 176(4) provided for taxation of such income." 8. While dealing with the factual scenario, more particularly, in Paragraphs 5 and 7, the Tribunal has held in favour of the assessee and inview of th....