2015 (5) TMI 213

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....n 176(4) of the Income Tax Act, and holding that a sum of Rs. 67,86,669/- reported by the assessee in AY 2009-10 would not be subjected to tax.  The facts necessary for deciding the appeal are that the respondent was a practising lawyer and was elevated as Judge of this Court on 11.4.2008. For the relevant year, a return was filed on 29.9.2009 declaring the income at Rs. 10,74,474. The AO was of the opinion that the exemption of Rs. 67,10,362/- claimed by the assessee was not justified in view of section 176(4) and sought to add it to the income as 'income from profession'. The assessee relying upon previous rulings of different High Courts as well as two judgments of this Court appealed to the Commissioner (Appeals) who accepted th....

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....ect to the provisions of this Act in respect of the total income of the previous year.' So, income tax has been provided by Section 4 (1) to be chargeable subject to the provisions of the Income Tax Act, 1961. Now, Section 14 of the Act mandates that for the purposes of charge of income tax, all income shall be classified under the five heads delineated therein, if not provided otherwise by the Act. And if a particular income according to its nature and quality falls under any head, its computation should be made in accordance with the directions contained in the group of sections relating to that head, that head only, and in accordance with no other head. This is what is the purport of Section 4, the charging section, when it makes it ....

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....come falling under the head ''Profits and gains of Business, Profession or Vocation'', even in a case where the profession is not carried on during any part of the relevant previous year. It has also been considered therein that Section 176 (4) of the Act introduces a legal fiction, which should be limited only to the purpose for which it has been created. Section 176 (4), then, by virtue of the fiction contained therein, merely treats the receipt as the income of the recipient. In the absence of any further fiction in the Section, the character of such receipt cannot be determined and no further fiction can be introduced so as to determine the head of charge under which such receipt would be made to fall. Thus, the express language of Sect....

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.... elevation as High Court Judge. 14. In 'Nalinikant Ambalal Mody vs. SAL Narayan Rao' (supra) [as considered in 'Justice R.M. Datta' (supra)], when there is a case to which the computation provisions pertaining to a charging Section cannot apply at all, as in the present case, it is evident that such a case was not intended to fall within the charging Section, lest a conclusion be arrived at, that while a certain income seems to fall within the charging Section, there is no scheme of computation for quantifying it, which conclusion is not the legislative intent. In 'Justice R.M. Datta' (supra), their Lordships held that in view of this ratio in 'Nalinikant Ambalal Mody' (supra), despite the insertion of Sec....