TMI Blog2000 (4) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... the return of income filed. In support of his claim of exemption, the appellant appended a note to the statement of computation of total income filed along with the return of income. The said note reads as under : "The assessee is in receipt of net amount of Rs. 4,69,512 towards the past outstandings of fees receivable in discontinued profession as Government Pleader. The assessee has been maintaining cash system of accounting for the professional receipts as a Government Pleader. The above amount has been received during the financial year ending 31-3-1995, that is after be was elevated (on 5-2-1992) as Judge of Hon'ble High Court of Andhra Pradesh. The assessee was not carrying on profession in the year of receipt of previous year ending (31-3-1995) and hence, the amount received does not relate to Professional Receipts for the said Previous Year ending 31-3-1995 relating to the assessment year 1995-96. Therefore, the same is claimed as exempted and shown in Part III of the Return of income" While processing the return of income under section 143(1)(a) of the Income-tax Act, 1961, the Assessing Officer added the net receipt of Rs. 4,69,512 as prima facie adjustment, under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred on the Assessing Officer under the said section is summary in character, and is confined to errors which are arithmetical in nature, and errors which are apparent from the face of the record. The Commissioner of Income-tax (Appeals) ought not to have confirmed an addition which was debatable, and which required an elaborate investigation into the facts of the case in exercise of the power under section 143(1) of the Act. (iii) The Commissioner of Income-tax (Appeals) ought to have appreciated that the appellant had paid the entire advance tax, and had annexed a statement to the return of income, explaining the basis on which the exemption was sought. The Commissioner of Income-tax (Appeals) ought to have appreciated that the appellant was desirous of having a decision on the legal point in question, inasmuch as there were differing opinions of the Courts/ Tribunal. The interpretation placed by the Commissioner of Income-tax (Appeals) on the provisions of section 143(1) of the Act would eliminate any possibility of debate, if the Assessing Officer is to have a power to determine all questions of law in exercise of a summary jurisdiction. (iv) The Commissioner of Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Counsel submitted that the Calcutta High Court has held in the case of Justice R.M. Datta that the profits and gains of a profession received in a subsequent year after the discontinuance of the profession cannot be taxed under section 176(4) of the Income-tax Act. He submitted that this decision of the Hon'ble Calcutta High Court was rendered on 4th July, 1989 whereas the judgment of the jurisdictional High Court relied on by the lower authorities in V. Parthasarathy's case was delivered way back on September 11, 1975. The learned counsel submitted that inspite of the decision of the A.P. High Court delivered as early as on September 11, 1975, the Hon'ble Calcutta High Court has taken a different view in a later decision. The decision of the Calcutta High Court was made on the basis of an earlier decision of the Supreme Court in Nalinikant Ambalal Mody v. S.A.L. Narayan Row, CIT [1966] 61 ITR 428. The learned counsel also submitted that the latest decision available on the subject is from the Chandigarh Bench of the Income-tax Appellate Tribunal in the case of Justice Kuldip Singh made on May 12,1993 wherein it was held that the disputed amount cannot be brought to tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the other of Hyderabad Bench 'A' in the case of Prudential Construction Co. Ltd. v. Asstt. CIT [IT Appeal No. 666 (Hyd.) of 1999, dated 30-12-1999]. 7. We heard both sides in detail. The appellant in this case is a sitting judge of the High Court of Andhra Pradesh. Before his elevation on 5-2-1992, His Lordship was practising as an advocate and particularly as a Government Pleader. During the previous year relevant to the assessment year under appeal, the appellant received a total amount of Rs. 6,61,610 on settlement of the pending bills for services rendered before his elevation as Judge of the High Court. As against this gross receipt of Rs. 6,61,610, the assessee has claimed expenditure of Rs. 1,92,098 and the balance of Rs. 4,69,512 has been shown as net receipt. This amount has been claimed as exempt by the appellant whereas the Assessing Officer has treated the same as income liable to tax. In this context, the issue to be decided by the Tribunal is not exactly whether the amount of Rs. 4,69,512 is liable to income-tax or not but to be precise, the question is whether this net receipt of Rs. 4,69,512 could be made the subject-matter of a prima facie adjustment while the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that finding, the Hon'ble High Court held that the assessee in that case was liable to be taxed on the income received by him on account of the profession which he had discontinued. The above decision of the Hon'ble A.P. High Court was delivered on 11th September, 1975. 9. As stated by the learned counsel for the assessee in a subsequent judgment, the Calcutta High Court held injustice R.M. Datta's case that the profits and gains of a profession received in a subsequent year after the discontinuance of the profession cannot be taxed under section 176(4) of the Act. In that case, the issue was considered by the Hon'ble High Court from a different angle. Section 176(4) creates two fictions. The first fictionis that any sum received after the discontinuance of the profession shall be deemed to be the income of the recipient. The second fiction is that the said income shall be charged to tax in the year of receipt if such income would have been included in the total income of the person had it been received before such discontinuance. The legislative intent indicated by the express language of section 176(4) of the Act does not warrant any assumption of a further fiction treating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court as the receipts cannot be brought under any of the heads of income provided in section 14 of the Income-tax Act, such receipts cannot be computed and therefore, cannot be taxed. For arriving at the above decision, the Hon'ble High Court of Calcutta relied on the decision of the Hon'ble Supreme Court in the case of Nalinikant Ambalal Mody. In that case, considered by the Supreme Court again the facts were similar. There also, the Hon'ble Supreme Court held that as the assessee was not carrying on any profession during the year in which the arrears were received, such arrears cannot be charged to tax. The decision of the Hon'ble High Court of Calcutta has been exactly on the line of the decision rendered by the Hon'ble Supreme Court in Nalinikant Ambalal Mody's case. Therefore, what we find is that the A.P. High Court has considered the matter in one angle and the Calcutta High Court has considered the matter in another angle, which were, of course, on the basis of the contentions raised by the respective assessees before the Courts. One thing is coming clear out of this decision. That is the issue whether the disputed receipt has to be taxed or not has got more than one d ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
