TMI Blog1988 (2) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Officer treated this amount as professional income and brought it to tax. The Appellate Assistant Commissioner held the payment to be by way of a testimonial and personal gift and not taxable. He recorded an alternative finding that even if it is regarded as income, it would be exempt under section 10(3) of the Act being casual and non-recurring in nature. The Revenue filed an appeal before the Tribunal. The Tribunal came to the conclusion that there was no material to suggest any direct nexus between the receipt of the amount of Rs. 30,000 and any past performance or performances rendered by the assessee and the receipt could not, therefore, be treated as the assessee's income. The Tribunal further held that the receipt in question was exempt from tax being casual and non-recurring. Arising out of this order of the Tribunal, the above question has been referred. Mr. Jayaraman, appearing on behalf of the Revenue, has contended that since the nature of the receipt has to be looked at only from the point of view of the recipient and since in this case the amount of Rs. 30,000 has been paid to the assessee for services rendered to carnatic music by him, the receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceeds from which, together with subscriptions, after being held by the trustees on certain securities, were eventually handed over to the cricketer and applied by him in the purchase of a farm. The question which fell for consideration was whether the amount given to the cricketer was a donation or a gift and was not an employment or profit arising from the assessee's employment and was consequently not assessable to income-tax. The Commissioners took the view that the amount was a donation or gift. The view of the Commissioners was affirmed by Rowlatt J. but his decision was reversed by the Court of Appeal. Then the matter was taken to the House of Lords. Viscount Cave L.C. approved of the test which was adopted by Rowlatt J. and the significant observations made by Viscount Cave L.C. were the following (p. 646 of 11 TC): "The question to be answered is, as Rowlatt J. put it, 'Is it in the end a personal gift or is it remuneration ? ' If the latter, it is subject to the tax ; if the former, it is not." Viscount Cave L. C. proceeded to apply this test and took the view that the net proceeds of the benefit match must be regarded as a personal gift and not as income from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied for the collections by excellence of performance on his part, they were excellent performances of his professional duty as cricketer, and they arose in the ordinary course of his service while playing as cricket professional of the East Lancashire Club. The second circumstance was that though the performances were exceptional, in the sense of being outstanding, they were not exceptional in the sense of being very rare and unlikely to be, save very occasionally at the most, repeated. The third circumstance was that it was a term of Mr. Dooland's contract of service that on each occasion on which he performed his service with the requisite degree of skill, he should be entitled to invite subscriptions for himself from bystanders. It was a right capable of enforcement at law, if Mr. Dooland's employers infringed it by refusing to permit the taking of a collection when, according to the league rule incorporated in his contract, his performance had reached the qualifying standard. This right was found to be a part of the consideration of the services flowing from his employers. The Master of the Rolls referred to the test adopted by Viscount Cave L. C. but pointed out that the recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hna Menon's case [1959] 35 ITR 48 (SC) referred to above, was liable to tax, was reached because it was found that the vocation of the assessee was teaching Vedanta and that vocation was carried on by him and the imparting of the teaching was the causa causans of the making of the gifts by the donor. On facts, it was found that it was impossible to hold that the payments to the assessee bad not been made in consideration of the teaching imparted by him and, consequently, the payments were income arising from the vocation of the assessee. There are at least four decisions of this court which provide an indication of the approach to be adopted in a case like the present one. The first decision is in S. A. Ramakrishnan v. CIT [1978] 114 ITR 253 (Mad). That was a case in which the assessee, who was an exponent of the epics like Ramayana and Mahabharata, was assessed to income-tax on amounts collected at the time of his discourses. He received some cash presents of the value of Rs. 19,700 on the occasion of his sashtiabdaPoorthi (sixtieth birthday). The Income-tax Officer assessed him to tax on Rs. 13,000 excluding a sum of Rs. 6,700 paid to him by his near relations. The contribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being the value of the lands gifted as income arising to the doctor-assessee out of his profession. This was deleted by the Appellate Assistant Commissioner and the deletion was upheld by the Tribunal. This court took the view that the services rendered by the assessee was not the causa causans of making the gift by the donor and, therefore, it should be treated only as a gift made out of personal esteem and arising out of the personal qualities of the assessee. The last decision is in C. P. Chitrarasu v. CIT [1986] 160 ITR 534 (Mad). That was a case in which the assessee who was a member of a political party but at the same time had distinguished himself as an author in Tamil literature was paid in connection with his birthday celebrations Rs. 48,176 which was used in the construction of a house and which was handed over to him at a function. This amount was treated as income in the hands of the assessee and the assessment was confirmed by the Appellate Assistant Commissioner and the Tribunal. This court took the view that merely because a member of a political party received gifts, the amount of the gift would not necessarily become income by way of remuneration for the service ..... X X X X Extracts X X X X X X X X Extracts X X X X
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