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income-tax Officer Vs. C.M. Pant - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Delhi
Decided On
Judge
Reported in(1985)14ITD239(Delhi)
Appellantincome-tax Officer
RespondentC.M. Pant
Excerpt:
.....of law. under section 4 of the act, which is a charging section, income-tax is chargeable on the total income of a person and the charge is to be in accordance with and subject to the provisions of the act. with this basis being there, the amount received by the assessee as monetary benefit in terms of so-called political pension must fit in within the definition of 'income' as also 'total income' as defined in section 2(24) and 2(25) of the act. section 2(24) reads as under ; (iia) voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes, not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution......
Judgment:
1. The short point for our decision in the present appeal filed by the revenue in relation to the assessment year 1980-81 for which the previous year ended on 31-3-1980 is the assessment of Rs. 1,260 received by the assessee as political pension. At the assessment stage, the assessee claimed it to be exempt, however, the ITO assessed it with the narration, 'pension as disclosed'. At the first appellate stage, the learned AAC held it to be exempt under Section 10(17B) of the Income-tax Act, 1961 ('the Act').

2. The amount has been received by the assessee in terms of pension to a political sufferer, since the assessee during the British regime, as a freedom fighter, is said to have been a part and parcel of the freedom movement and on attaining independence, the Government lauded the services of freedom fighters and the respective State Governments as also the Central Government sanctioned monetary assistance to political sufferers who have undergone various sentences/imprisonment under the British rule. The assessee being one of those political sufferers has received the amount in question from the State of Uttar Pradesh. The amount is without any consideration as also without any source, since neither any services has been rendered by the assessee to the State of Uttar Pradesh nor to any one else. What he has done is, according to the dictates of his conscience, having taken part in the freedom movement to see his motherland free and independent from the yoke of British rule. In fact, as the things stand, it was a disservice to the then British Government and, accordingly, the monetary benefit being received by the assessee can be said to be without any consideration and without any source, since it entirely depends upon the whims of the giver and although the payment is continuous over a long period yet it is voluntary payment given by the giver to the assessee and the assessee has no legal claim, much less, a claim to enforce it in a Court of law. Under Section 4 of the Act, which is a charging section, income-tax is chargeable on the total income of a person and the charge is to be in accordance with and subject to the provisions of the Act. With this basis being there, the amount received by the assessee as monetary benefit in terms of so-called political pension must fit in within the definition of 'income' as also 'total income' as defined in Section 2(24) and 2(25) of the Act. Section 2(24) reads as under ; (iia) voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes, not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution.

Explanation : For the purposes of this sub-clause, 'trust' includes any other legal obligation ; (iii) the value of any perquisite or profit in lieu of salary taxable under Clauses (2) and (3) of Section 17 ; (iv) the value of any benefit or perquisite, whether convertible into money or not, obtained from a company either by a director or by a person who has a substantial interest in the company, or by a relative of the director or such person, and any sum paid by any such company in respect of any obligation which, but for such payment, would have been payable by the director or other person aforesaid ; (iva) the value of any benefit or perquisite, whether convertible into money or not, obtained by any representative assessee mentioned in Clause (iii) or Clause (iv) of Sub-section (1) of Section 160 or by any person on whose behalf or for whose benefit any income is receivable by the representative-assessee (such person being hereafter in this sub-clause referred to as the 'beneficiary' and any sum paid by the representative-assessee in respect of any obligation which, but for such payment, would have been payable by the beneficiary ; (v) any sum chargeable to income-tax under Clauses (ii) and (iii) of Section 28 or Section 41 or Section 59 ; (va) the value of any benefit or perquisite taxable under Clause (iv) of Section 28 ; (vii) the profits and gains of any business of insurance carried on by a mutual insurance company or by a co-operative society, computed in accordance with Section 44 or .any surplus taken to be such profits and gains by virtue of provisions contained in the First Schedule ; (viii) any annuity due, or commuted value of any annuity paid, under the provisions of Section 280D ; (ix) any winnings from lotteries, crossword puzzles, races, including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever ; 3. Section 2(45) defines 'total income' as meaning the total amount of income referred to in Section 5 of the Act, computed in the manner laid down in the Act. Section 5 deals with the topic 'Scope of total income' and reads as under : (1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which- (a) is received or is deemed to be received in India in such year by or on behalf of such person ; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year ; or Provided that, in the case of a person not ordinarily resident in India within the meaning of Sub-section (6) of Section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India.

(2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which- (a) is received or is deemed to be received in India in such year by or on behalf of such person ; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year.

Explanation 1 : Income accruing or arising outside India shall not deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India.

Explanation 2 : For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India.

4. A reading of the above sections, viz., Sections 2(24), 1(45) and 5 along with the provisions of Section 4, the charging section, makes it patently clear that an amount to be subjected to charge of income-tax must lit in within these definitions, but the facts of the case, with which we are seized of do not warrant the inference that the amount can be labelled as 'income', much less, 'total income', hence, it is not chargeable to tax in the hands of the assessee. Admittedly, the position in law is that all receipts by an assessee cannot necessarily be deemed to be the income of the assessee for the purposes of income-tax and the question whether any particular receipt is income or not depends on the nature of the receipt and the true scope and effect of the relevant taxing provision. The income-tax authorities cannot assess all receipts, since they can assess only those receipts which amount to 'income'. The legal position, as such, boils down to the fact that before a receipt can be assessed as 'income', the authorities must find it to be an 'income' and they cannot find it so until and unless there be material to justify their stand. In the case of the assessee, the amount received by him is for no services to the State of Uttar Pradesh, much less, to the Government of India. Accordingly, the amount is a 'dole', i.e., a receipt without any consideration and since it is a 'dole', it cannot be said to have any source. The payment depends entirely on the whims of the State of Uttar Pradesh, hence, the receipt cannot be termed to be an 'income' and, accordingly, cannot be brought into the mischief of the provisions of the Act, for being charged to tax. If any authority is required for the proposition, then Mehboob Productions (P.) Ltd. v. CIT [1977] 106 ITR 758 (Bom.), Lal Chand Gopal Das v. CIT [1963] 48 ITR 324 (All.) at p. 336 and Siddhartha Publications (P.) Ltd. v. CIT [1981] 129 ITR 603 (Delhi) are in point.

5. The net result is that the revenue fails and the receipt of amount by the assessee from the State of Uttar Pradesh as political pensioner is held not to be falling within the ambit of the word 'income' as envisaged in the Act. The appeal fails.

6. While agreeing with the conclusion recorded by the learned Judicial Member, I would add that the token payment made to the assessee was with the sole purpose of honouring a freedom lighter. He had no legal right to receive it and it was not a 'pension' for any service rendered. Naming it as a 'pension' is not at all material. It was a gift by the State Government. Thus, this was a casual payment. A voluntary payment made without consideration, even if it is paid continuously over a period, is not income if it depends solely on the whim or sweet will of the payer. It was held by the Bombay High Court in the case of H.H. Maharani Shri Vijaykuverba Saheb of Morvi v. CIT [1963] 49 ITR 594 at p. 605 that such voluntary payment which cannot be traced to any source but only to the whim of the donor cannot be considered as income. That being the legal position it is hoped that as a policy no effort should be made to bring such small payments made to the freedom fighters to tax.


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