TMI Blog2010 (7) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... .Counsel for M/s.P.Sivagnanam A.S.Balaji. JUDGMENT M.SATHYANARAYANAN, J The Revenue has preferred this Appeal under Section 260-A of the Income-tax Act, 1961 challenging the vires of the order dated 17.10.2008 passed by the Income-tax Appellate Tribunal C Bench, Chennai, made in I.T.A 588/Mds./2005. 2. This appeal was admitted on the following substantial questions of law:- 1. Whether on the facts and circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the gifts received on Assessee s birthday of Rs.1,75,70,347/- as Capital Receipt and having no nexus with his profession as vocation of religious practice is valid? 2. Whether on the facts and circumstances of the case, the Income-tax Appellate Tribunal was right in saying that the reopening under Section 147 of the Income-tax Act, on mere surmise, even though the assessment was reopened within 4 years with valid reasons from the end of the assessment year and hence no proviso to Section 147 will apply to the facts of this case?: 3. The facts leading to the filing of this appeal are as follows:- As per the profile submitted by the Respondent/Assessee, he w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration for profession/vocation. The Commissioner of Income-tax (Appeals) has also considered the decision reported in 231 ITR page 632 (Mad.) Commissioner of Income Tax vs. Sri.Vanamamalai Ramanuja Jeer Swamigal for arriving at such a finding and allowed the appeal filed by the Assessee. 8. The Department/Revenue aggrieved by the order passed by the Commissioner of Income Tax (Appeals), had preferred further appeal before the Income Tax Appellate Tribunal C Bench, Chennai in I.T.A.No.588/Mds./2005 for the assessment year 2004-2005. 9. The appellate Tribunal after taking into consideration the rival submissions and considering the various decisions cited before him, vide order dated 17.10.2008, has dismissed the appeal on the ground that that the gifts received by the Assessee, have no direct nexus with any of his activities and it is squarely covered by the decision cited supra (231 ITR page 632). The Revenue aggrieved by the order of dismissal of the appeal passed by the Income Tax Appellate Tribunal C Bench, Chennai, had preferred this appeal. 10. Mr.J.Nareshkumar, learned Senior Standing Counsel appearing for the Income Tax Department/appellant, has submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) - Krishna Menon (P) vs. Commissioner of Income-tax, the Assessee after his retirement as a Superintendent of Police, spending his time in studying Vedanta Philosophy and expounding the same to such persons. He soon gathered a number of disciples. One of the disciples had transferred the entire balance outstanding in his account to the credit of the Assessee and the said amount was the subject matter of assessment. The Income-tax Officer had assessed the said income as a taxable income and the Assessee preferred an appeal before the Assistant Commissioner who dismissed the appeal. The Assessee s appeal to Appellate Tribunal has also ended in dismissal and hence further appeal was preferred before the High Court of Bombay which has also ended in dismissal. The Assessee filed appeal before the Hon ble Supreme Court of India. The Hon ble Supreme Court on the facts, found that the Assessee was teaching his disciples Vedanta, without any motive or intention of making profit out of such activity and that teaching of Vedanta by the Assessee can properly be called the carrying on of a vocation by him. The Supreme Court held that the importing of the teaching was the cause causans of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income-tax, the Assessee was a Priest in a Monastery and he received substantial foreign remittances and the surplus amount that remained after distribution to various other Priests for performing the mass, was treated as the income of the Assessee and was taxed. The Assessee challenged the imposition of tax, and lost before the authorities and hence he preferred further appeal to High Court of Kerala. The High Court of Kerala held that there was a close and intimate link between the occupation or avocation of the Assessee and the payments received by him and based on the said reason, dismissed the appeal filed by the Assessee. 18. Similar view was taken in the unreported judgment dated 16.12.2008 made in W.P.Nos.15527 to 15537 of 2003. 19. The learned senior standing counsel appearing for the appellant/Department by placing strong reliance on the above cited decisions would submit that but for the fact the Assessee/Respondent herein is a religious leader, he would not have received gifts and hence there is a close and intimate link between the activities/avocation of the Assessee and the payments received by him and therefore, it was rightly taxed by the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for further appeal before this Court. A Division Bench of this Court by placing reliance upon 35 ITR page 48 (SC) (Krishna Menon s case), 114 ITR page 253 (Mad) S.A.Ramakrishnan vs. CIT and other decisions, has held that though the Assessee is an artist by profession, there is no direct nexus between this payment and his vocation though it may not be denied that there is an indirect connection between the two. The payment received by the Assessee from his fans, was expression of their good will and hence the said amount cannot be said to have been paid to him by way of remuneration for those services. Citing the said reasons, this Court in the said decision, has upheld the claim of the Assessee and dismissed the appeal preferred by the Income-tax Department. 22. In 160 ITR 534 C.P.Chitrarasu vs. Commissioner Income-tax, Madras, the Assessee was an active member of a political party and held various offices. A committee consisting of the party men of that party had collected donations from the members of the party, businessmen and public and also arranged a drama for the purpose of donating a purse and the same was donated to the Assessee. The Income-tax Officer held that a sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, dismissed the appeal preferred by the Revenue. 24. Learned senior counsel appearing for the Respondent/Assessee would submit that the decision reported in 231 ITR 632 (Mad.) is squarely applicable to the facts of the case and further that the Commissioner of Income-tax (Appeals) as well as the Income-tax Appellate Tribunal had upheld the case of the Respondent by rendering concurrent findings. It is further submitted that no substantial questions of law arose for consideration in this appeal and hence prayed for dismissal of this appeal. 25. This Court has carefully considered the submissions made by the learned senior standing counsel appearing for the appellant and the learned senior counsel appearing for the Respondent and also the decisions relied on by the respective counsel. 26. The Religion is a matter of faith stemming from the depth of the heart and mind and is a belief which binds the spiritual nature of men to super natural being. Devotion is a consecration and denotes an act of worship. Faith, in the strict sense constitutes firm reliance on the truth of religious doctrines in every system of religion and religion, faith or devotion is not easily intercha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived on the occasion of the birthday and so called vocation carried on by the Assessee. 31. The decisions relied on by the learned senior standing counsel appearing for the appellant/Department have no application to the facts of the present case as in those cases, Courts held that the activities of the concerned Assessees would amount to vocation and object of which, is to make a profit and also amount to revenue receipt. 32. The decisions reported in 171 ITR 447 (Mad.) Commissioner of Income-tax vs. Mr.Balamuralikrishnan, 160 ITR 534 C.P.Chitrarasu vs. Commissioner Income-tax, Madras, 231 ITR 632 Commissioner Income-tax vs. Sri Vanamamalai Ramanuja Jeer Swamigal, the facts of which have been discussed in detail by this Court in the earlier paragraphs, are squarely applicable to the facts of this case, for the reason that the gifts made by the followers are voluntary in nature which are neither income nor capital in the hands of the Assessee. It has been further held in those decisions that unless and until the gift is connected with the profession or avocation, it cannot be taxed and in the absence of link or connection between the gift made by the devotees and the profe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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