1989 (6) TMI 89 - AT - Income Tax

Summary

Issues Involved:
1. Taxability of the sum of US Dollar 5,000 received by the assessee for delivering a keynote address.
2. Nature of the receipt - whether it is income or a personal gift/testimonial.
3. Connection of the receipt with the assessee's employment and official capacity.
4. Applicability of Section 2(24) and Section 10(3) of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Taxability of the sum of US Dollar 5,000 received by the assessee for delivering a keynote address:
The assessee received US Dollar 5,000 from the organisers of the XXXVth JCI World Congress, 1980, for delivering a keynote address and participating in a panel discussion. The Income Tax Officer (ITO) treated this amount as taxable, considering it a lecture fee. The assessee contended that the amount was exempt from income tax, claiming it was not income but a personal gift or testimonial.

2. Nature of the receipt - whether it is income or a personal gift/testimonial:
The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the ITO's decision, stating that the receipt was contractual in nature and described by the payer as a "lecture fee." The CIT(A) emphasized that the onus was on the assessee to prove otherwise, which he failed to do. The Tribunal, however, analyzed the background, qualifications, and eminence of the assessee, noting that the invitation was extended due to his international recognition and not as a professional engagement. The Tribunal concluded that the payment was more of an honorarium, a reward for services where custom or propriety forbids a price to be set.

3. Connection of the receipt with the assessee's employment and official capacity:
The CIT(A) observed that the receipt was intimately connected with the assessee's official capacity and employment with the Government of India, who deputed him for the participation and bore all expenses. The Tribunal, however, noted that the Government of India permitted the assessee to keep any fee or honorarium received and even bore certain expenses, indicating that the Government was also interested in his participation. The Tribunal concluded that the payment was not related to his employment but was a personal present in appreciation of his contribution.

4. Applicability of Section 2(24) and Section 10(3) of the Income-tax Act, 1961:
The Tribunal referred to the explanatory notes on the Finance Act, 1972, and CBDT Circular No. 108, which clarified that casual and non-recurring receipts are liable to income tax only if they can be characterized as income. The Tribunal concluded that the receipt in question was not income as it was not earned in the exercise of business, profession, or vocation, nor was it an addition to his remuneration as a government employee. Therefore, it did not constitute a receipt in the nature of income and was not liable to tax.

Conclusion:
The Tribunal reversed the CIT(A)'s decision, holding that the sum of US Dollar 5,000 received by the assessee was not taxable. The receipt was deemed a personal present in appreciation of the assessee's eminence and contribution to the JCI World Congress, and not income within the meaning of the Income-tax Act, 1961. The assessee's appeal was allowed.