TMI Blog2003 (2) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year in question being utilised by him in the construction of the house property shall be the "income" within the meaning of section 2(24) of the Income-tax Act, 1961, and is liable to be taxed. - - - - - Dated:- 5-2-2003 - Judge(s) : P. P. NAOLEKAR., P. G. AGARWAL. JUDGMENT The judgment of the court was delivered by P. P. NAOLEKAR C. J. - For the assessment year 1981-82, the assessee Troilakya Chandra Bora, has submitted his return. The Income-tax Officer has found that the assessee constructed a house property, the value of which was determined by the Valuation Officer of the Department at Rs. 5,92,803. The construction of the said property was started on February 25, 1980, and completed on March 31, 1981. While ascertaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n receipts and receipts purely of windfall nature certainly do not constitute the income of the recipient. As the assessee acknowledged the liability in respect of the embezzled amount to his employer the said amount forms merely a liability payable at a future date by him and cannot constitute his income, inasmuch as, the embezzled amount cannot be considered to be the business or professional income of the assessee, as the assessee was not in the business or profession of embezzling money. The Tribunal also strongly relied upon the decision of the Madras High Court in CIT v. A. R. Adaikappa Chettiar [1973] 91 ITR 90. Aggrieved by the said order of the Tribunal, the present appeal is preferred under section 260A of the Income-tax Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, more so, when the assessee undertook to return it back, the amount has to be construed as loan. The embezzled amount, not being the amount belonging to the assessee, it cannot constitute taxable income and consequently no tax is liable to be paid on it as has been rightly held by the appellate authority and the Tribunal. By the definition "income" in section 2(24) is included a certain class of receipts. The Act of 1961 emphasises it clearly that the meaning of income would not be restricted to the class of receipts mentioned in the definition but also includes in its ambit the meaning of all terms as generally understood. It is impossible to define exhaustively the meaning of income, it is therefore, the Legislature purposely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat section 2(24)(ix) could not take in the amount received by the respondent in a race which involved skill in driving. On appeal to the Supreme Court, the Supreme Court has reversed the decision of the High Court and held that since the definition of "income" in section 2(24) was inclusive, the purpose of the definition was not to limit the meaning of "income" but to widen its net and the several clauses therein were not exhaustive of the meaning of income, even if a receipt did not fall within the ambit of any of those clauses, it might still be income if it partook of the nature of income. The natural and grammatical meaning of the word "income" according to the Oxford Dictionary is "a thing that comes in". The word 'income" is understo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es this money under an agreement. The amount embezzled cannot of partake the character of a loan. The basic and fundamental characteristic of loan is the consent and knowledge of the lender at the time of advancement of money. It also incorporates the condition of repayment or promise to return back the amount taken by the borrower at the time the money is advanced. In the embezzlement, the money is taken by the person without consent or knowledge of the owner. There is no agreement to pay the money at the time the money is taken. The agent or the employee misappropriates the money belonging to his employer in fraud of him and in breach of his obligation to him and, therefore, it cannot be said that he owes this money under an agreement. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x liability on the ground that the cars of the company were partly used by the managing agents of the company for their private purposes. The Income-tax Officer later on issued notice to the assessees for treating the amount disallowed to the company as the income of the assessees under section 2(6C)(iii) of the Indian Income-tax Act, 1922 and section 2(24)(iv) of the Income-tax Act, 1961. While dealing with this question the court held that for the purpose of section 2(6C)(iii) of the Indian Income-tax Act, 1922 and section 2(24)(iv) of the Income-tax Act, 1961, it is necessary that before a person could be said to have obtained a benefit or perquisite from a company, there should be some legal or equitable claim, even though it be conting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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