TaxTMI 
TaxTMI 
2003 (2) TMI 52
X X X X Extracts X X X X
X X X X Extracts X X X X
....ompleted on March 31, 1981. While ascertaining the source of investment during the course of assessment proceeding it came to the light that the assessee was an employee of Eastern Tea Brokers Pvt. Ltd., Guwahati, and has managed to embezzle cash of the said company. The Income-tax Officer assessed the embezzled amount of Rs. 3,53,220 as income of the assessee and that amount was subjected to tax. The assessee preferred appeal before the Commissioner of Income-tax (Appeals), Guwahati. The appellate authority held that the embezzled amount cannot be treated as taxable income in view of section 2(24) of the Income-tax Act, 1961, and has placed reliance on the previous decision rendered by the Tribunal in the assessee's case and the decision o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under section 260A of the Income-tax Act, 1961. The High Court posed for itself the following two questions for consideration: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in upholding the order of the Commissioner of Income-tax (Appeals) whereby addition of the embezzled money to the income of the assessee under the head 'Income from other sources' was deleted ? 2. Whether, on the facts and in the circumstances of the case, the embezzled money in the hands of the assessee and utilised by the assessee is an income within the meaning of section 2(24) read with section 69A of the Income-tax Act, 1961?" It is submitted by learned counsel for the Revenue that the amount ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ome, it is therefore, the Legislature purposely kept the definition of income an inclusive definition. The apex court had an occasion to consider the scope and ambit of the word "income" as defined under section 2(24) of the Income-tax Act in the matter of CIT v. G. R. Karthikeyan [1993] 201 ITR 866 (SC). In the said case the assessee, an individual, was having income from salary and business, participated in a car rally. The rally was restricted to private motor cars. The rally was designed to test endurance driving and the reliability of the automobiles. The method of ascertaining the first prize was based on a system of penalty points for various violations. The competitor with the least penalty points was adjudged the first prize winner....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng that comes in". The word 'income" is understood so as to include the capital gain. The expression of "income" is of the widest amplitude and it includes not merely what is received or what comes in by exploiting the use of the property but also that which can be converted into income. The rally was a contest, if not a race and the respondent/assessee entered the contest to win it, What he got was a return for his skill and endurance. It was "income" construed in its widest sense. Though it was casual in nature, it was nevertheless an income. The judgment of the apex court clearly lays down that "income" has to be construed in its widest amplitude. The question before us is whether the amount embezzled can be construed to be an income ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that he owes this money under an agreement. It is money which is withdrawn by the employee out of the employer's coffers without authority and in fraud of his employer and can in no sense be called a loan advanced by the employer to be repaid by the employee. The money received or taken by the employee by embezzlement is not money taken under an obligation to repay nor he has taken the money as a debt to be paid back on the subsequent dates. One who uses another's property or money to secure gain a profit therefrom may, even though he did it wrongfully and holds it, be subjected to income-tax to that extent. Money embezzled is a gain to the embezzler and, therefore, falls within the wider definition of "income" under the Income-tax Act. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al or equitable claim, even though it be contingent or contested in nature. A mere receipt of money or property which one is obliged to return or repay to the rightful owner as in the case of a loan or credit, cannot definitely be taken as a benefit or perquisite obtained from the company. The benefit or advantage which might have been taken by the director or other person from a company without any claim of right has to be repaid or returned to the company if the company discovers the unauthorized taking and seeks to enforce its restitution. The necessary elements, therefore, for treating the benefit or perquisite obtained to be an income, it is necessary that the person who received the money has the authority to claim that benefit. Any a....