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Commissioner of Income-tax, Tamil Nadu-iii, Madras Vs. Chinna Oomen - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 922 and 923 of 1979
Judge
Reported in[1984]150ITR583(Mad)
ActsIncome Tax Act, 1961 - Sections 10(3)
AppellantCommissioner of Income-tax, Tamil Nadu-iii, Madras
RespondentChinna Oomen
Appellant AdvocateJ. Jayaraman, Adv.
Respondent AdvocateS.V. Subramaniam, Adv.
Excerpt:
- .....amounts should be taken to be income, the only question that we have to consider is whether the receipt is casual and non-recurring so as to come within the scope of s. 10(3) of the act. 4. a perusal of the terms of the chit agreement would indicate that every month the chit is conducted by accordance with the relevant bye-laws of the bank which have been treated as part of the agreement. clause 7 of the bye-law for the monthly chits provides that the dividend in each chit is distributed equally among the subscribers not by way of actual payment but by way of reduction from the next instalment subscription and such reduction will be shown as credits in their accounts. thus it is clear that the assessee gets every month his share of the dividend which will depend upon the amount of bid.....
Judgment:

Ramanujam, J.

1. At the instance of the Revenue, the following question has been referred to this court for its opinion by the Income-tax Appellate Tribunal :

'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the sum of Rs. 2,188 and Rs. 3,145 being the chit kasar received by the assessee from the Bank of Madurai Limited should be treated as casual and non-recurring in nature and that exemption under section 10(3) should be allowed'

2. The assessee is an individual, and for the assessment years 1975-76 and 1976-77, the chit dividends of Rs. 2,188 and Rs. 3,145 respectively received by the assessee from the Bank of Madurai Limited were assessed under the head 'Other sources' by the ITO. On appeal, the AAC confirmed the assessment of these amounts. On further appeal to the Tribunal, the Tribunal, after examining the bye-laws of the monthly chits of the Bank of Madurai Limited under which the chit dividends had been paid to the assessee each months, was prima facie of the view that the amounts will not partake the character of income. However, in view of the concession made by the assessee's learned counsel that they will partake the character of income, the Tribunal proceeded to consider the further question as to whether the amounts of dividend which have been considered to be income, were causal and non-recurring so as to enable the assessee to claim the benefit of s. 10(3) of the Act. The Tribunal held, that as there is no certainty of getting the dividend and more so the quantum of such dividend, as that would depend on the amount of bid at every auction, the receipt should be taken to be casual and non-recurring. Aggrieved by the said view taken by the Tribunal, the Revenue is before us by way of this reference.

3. After hearing the learned counsel on both sides length and after a due consideration of the matter, we are inclined to take the view that the Tribunal is not right in holding that the receipts in this case are casual and non-recurring and, therefore, the benefit of s. 10(3) is available to the assessee. As already stated, in view of the concession made by the learned counsel for the assessee, the said two amounts should be taken to be income, the only question that we have to consider is whether the receipt is casual and non-recurring so as to come within the scope of s. 10(3) of the Act.

4. A perusal of the terms of the chit agreement would indicate that every month the chit is conducted by accordance with the relevant bye-laws of the bank which have been treated as part of the agreement. Clause 7 of the bye-law for the monthly chits provides that the dividend in each chit is distributed equally among the subscribers not by way of actual payment but by way of reduction from the next instalment subscription and such reduction will be shown as credits in their accounts. thus it is clear that the assessee gets every month his share of the dividend which will depend upon the amount of bid at the monthly auction. Therefore, the mere fact that the amount of dividend varies each month cannot make it casual as has been assumed by the Tribunal. It is not possible to say that merely because varied amounts are received each month as the assessee's share of dividend, the receipts cannot be causal. Further, the receipt occurs every month and, therefore, it is recurring. We do not agree with the Tribunal that the receipts in these cases are casual and non-recurring. For an assessee to claim the benefit of s. 10(3), he must not only show that the receipt is casual but be must also show that the receipt is non-recurring. In this case the receipt is there every month though not of the same amount. In our view, therefore, the receipt is not casual and non-recurring as has been held by the Tribunal.

5. In this view of the matter, we answer the question referred in the negative and against the assessee. The Revenue will get its costs from the assessee. Counsel's fee Rs. 500.


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