1984 (10) TMI 36

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....? " This reference relates to the income-tax assessment year 1976-77. The assessee, Smt. Batta Kalyani, runs a hardware and paint shop. She employed her husband, B. Venkataramaiah, to manage the business and paid him salary for services rendered. There is no dispute that the business is carried on by the assessee as a sole proprietrix. The ITO included in the total income of the assessee, the salary paid by the assessee to her husband by applying the provisions of s. 64(1)(ii) of the Act. It may be relevant to extract the same : " (1) In computing the total income of any individual, there shall be included all such income as arises directly or indirectly-...... (ii) to the spouse of such individual by way of salary, commission, fees o....

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....e to the qualification awarded by a recognised body; (b) there was also no evidence in the present case to show that the income earned by the assessee's husband was solely attributable to the application of technical or professional knowledge and experience. In the above view, the Income-tax Appellate Tribunal reversed the order of the AAC and upheld the ITO's inclusion in the assessee's income under s. 64(1)(ii) of the salary paid to her husband. The assessee asked for and obtained this reference under s. 256(1) of the Act. Sri M. J. Swamy, learned counsel for the assessee, has raised a twofold plea before us. Firstly, he urged that the Tribunal was in error in considering that the technical or professional qualification for purposes o....

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....he learned counsel, the requirements of the proviso are satisfied and the salary paid to the assessee's husband should not have been included in the total income of the assessee. Sri M. S. N. Murthy, learned standing counsel for the Revenue, urged that the word " qualification " occurring in the first part of the proviso should necessarily refer to a certificate, diploma or a degree conferred by recognised body and the technical or professional knowledge and experience referred to in the latter part of the proviso must also originate from the qualification referred to in the first part. According to the learned counsel for the Revenue, technical or professional knowledge and experience simpliciter without a qualification does not satisfy ....

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....r opinion, the Tribunal erred in coming to the conclusion that unless a recognised body conferred a qualification, it should not be considered that a person possessed technical or professional qualifications. It is enough, in our opinion, for the purpose of the proviso if the recipient of the salary possesses the attributes of technical or professional qualifications, in the sense that he has got expertise in such profession or technique. If by the use of that expertise in the profession or technique, the person concerned earns salary, then the latter part of the proviso is also satisfied. Coming, however, to the facts of the present case, we are not satisfied that the second part of the proviso is complied with. The finding of the Tribun....