1973 (7) TMI 26 - HC - Income Tax

(i) Whether on the facts and in the circumstances of the case the Tribunal was justified in law in holding that the sums of Rs. 2, 90, 220 and Rs. 3, 63, 750 were not assessable as income of the assessee for the assessment years 1960-61 and 1961-62 ? (ii) Whether on the facts and in the circumstances of the case the Tribunal was justified in law and had material for holding that the sums of Rs. 2, 90, 220 and Rs.3, 63, 750 are exempt from taxation under section 4(3)(vii) of the Indian Income-tax Act 1922 for the assessment years 1960-61 and 1961-62 respectively ? - the circumstances pointed out that the donors were interested in the assessee continuing to exercise his vocation. There is nothing personal in that. We therefore hold that these receipts arose from the exercise of an occupation by the assessee excluded from the ambit of section 4(3)(vii). The two questions referred to us have therefore to be answered in the negative that is in favour of the department and against the assessee

Issues Involved:
1. Whether the sums of Rs. 2,90,220 and Rs. 3,63,750 were assessable as income of the assessee for the assessment years 1960-61 and 1961-62.
2. Whether the sums of Rs. 2,90,220 and Rs. 3,63,750 are exempt from taxation under section 4(3)(vii) of the Indian Income-tax Act, 1922, for the assessment years 1960-61 and 1961-62.

Issue-wise Detailed Analysis:

1. Assessability of the Sums as Income:
The Tribunal was tasked with determining if the sums of Rs. 2,90,220 and Rs. 3,63,750 received by the assessee were assessable as income. The assessee, a publisher of a Malayalam daily newspaper, claimed that these sums were donations from friends in the United States who supported his religious movement, India Gospel Mission. The Income-tax Officer initially found these amounts taxable, rejecting the assessee's contention. The Appellate Assistant Commissioner upheld this view, applying the principle from A. Govindarajulu Mudaliar v. Commissioner of Income-tax, treating the sums as unexplained credits. The Tribunal, however, found that the amounts were remittances from the Indian Christian Crusade, U.S.A., and not remuneration for services rendered, thus applying the principle from Parimisetti Seetharamamma v. Commissioner of Income-tax and H. H. Maharani Shri Vijayakuverba Saheb of Morvi v. Commissioner of Income-tax, concluding that the receipts were casual, non-recurring, and not income.

2. Exemption Under Section 4(3)(vii):
Section 4(3)(vii) of the Indian Income-tax Act, 1922, exempts receipts of a casual and non-recurring nature from being included in total income, provided they do not arise from business, profession, vocation, or occupation. The Tribunal held that the donations were exempt under this section, as they were not linked to any business or professional activity. However, upon review, the High Court found that the assessee's activities of propagating religion and fighting atheism constituted an occupation or vocation. The court referred to the assessee's own statements and the nature of his activities, concluding that the donations were intimately connected to his vocation. The court cited English case law, including Strong & Co. of Romsey Ltd. v. Woodifield and Commissioners of Inland Revenue v. E. C. Warnes and Co. Ltd., to support the principle that losses or receipts connected with a trade or occupation are assessable as income. Consequently, the court determined that the sums received by the assessee arose from his occupation and were not exempt under section 4(3)(vii).

Conclusion:
The High Court answered both questions in the negative, ruling in favor of the department and against the assessee. The sums of Rs. 2,90,220 and Rs. 3,63,750 were deemed assessable as income, and not exempt under section 4(3)(vii). The court acknowledged the complexity of the case and directed both parties to bear their respective costs.

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