TMI Blog1986 (2) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Officer in the assessment proceedings for the assessment year 1971-72 expressly referred to the fact "that the sum of Rs. 48,176 was collected by the well-wishers of the deceased-assessee and party workers and this was utilised for the construction of the house property at Anna Nagar and a Committee was formed for the celebration of the assessee's 64th birthday and the house was handed over to the assessee at a formal function got up for the occasion. He, however, took the view that the amount collected and paid to the assessee was in consideration of his services as a political worker. This finding was confirmed by the Appellate Assistant Commissioner taking the view that the sum of Rs. 48,176 could not be treated as anything but income in, the hands of the assessee as arising out of his exercise of profession or vocation as a politician. The Tribunal extracted a list of the donors and apart from individuals from different places, the list contains the names of business concerns like A. K. M. Textiles, Md. Abdul Khader Sons and others. Among the donors is also an association known as Skins Hides Merchants Association. The case of the assessee before the Tribunal was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's legal representative has contended that the first question is really concluded by a decision of this court on similar facts in CIT v. S. A. Rajamanickam [1984] 149 ITR 85. In this decision, a Division Bench of this court has held in the case of an assessee who was an active member of political party that donations made by various persons for giving purse to the assessee was not income of the assessee. The learned counsel appearing on behalf of the Revenue has, however, contended that it is not open to the assessee to challenge in this reference the finding that the amount of Rs. 48,176 was not the income of the assessee arising from a vocation or an occupation. The contention appears to be that the finding that the amount in question was the income arising from vocational occupation is a finding of fact and the argument is that the question referred is not that there is no material to support the finding. A reference was made to the decision of the Supreme Court in CIT v. Imperial Chemical Industries (India) (P.) Ltd. [1969] 74 ITR 17, in which the Supreme Court, with reference to the finding given by the Appellate Tribunal in that case, held that there was no proof of the agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cannot be disputed that a finding of fact relied on by the Tribunal must be accepted by this court as binding for purposes of the reference under section 66 of the Indian Income-tax Act, 1922, or section 256 of the Income-tax Act, 1961, in so far as the present case is concerned, on the question as to whether the amount in question can be treated as income arising from vocation or occupation being dependent upon a legal inference to be drawn on established facts, we must hold that the assessee is entitled to canvass the question as directed by this court to be referred for the opinion of this court. For the purpose of this case, we must proceed on the terms in which question No. 1 has been framed. Though it appears to us that it was the positive case of the assessee that the amount given to him was expressly for the purpose of construction of a house, which itself was presented to him by the birthday celebration committee, the Appellate Assistant Commissioner has referred in his order to the assessee's letter dated July 8, 1975, in which he has clearly stated that the house in question was constructed by the 64th Birthday Celebration Committee from 1969 to May, 1970, and that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles he followed and that he was responsible for what was then known as self-respect movement in which the DMK party did evince a keen interest. It was also stated that he was the author of a number of books and that he had delivered speeches within the country and abroad to spread the self-respect movement. It is this selfless service, according to the assessee, and the principles he followed ultimately enabled his biography to be written in poetic verse form by one V. Kabilan, a Tamil poet, in 1970 which was published in May, 1970, under the name of " C.P.C. ULA " which in simple translation would mean " in praise of the assessee ". According to the assessee, these were sufficient indications of the high respect and regard in which some people held him. His contribution, according to him, to the Tamil literature was more than to politics. These circumstances were highlighted by the assessee to show to the tax authorities that he was not purely a politician and that he was a man of wisdom, respected by people of all walks of life who were influenced by his service to Tamil and the State of Tamil Nadu. Now apparently, none of these circumstances seems to have been considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olitical party. As we have already pointed out, the order of the Tribunal does not make any reference to the positive case of the assessee that he was more of an author and a reformer than a politician and it is those activities which were sought to be honoured by the people by bringing out his biography and making a collection for a purse to be presented to him on his 64th birthday. The observations made by the Tribunal that the collections were made not out of any personal regard, but were made because the assessee " wielded " influence in the DMK party, appears to us to be an inference without any evidence. As a matter of fact, it does not appear that there is any material placed by the Revenue to disprove the case of the assessee that he was more reformer, in the sense he understood the term and a writer in Tamil, than a politician. These is also no evidence to show that the contributions were made only by the members of the DMK party. As we have already indicated, there are some associations which have also contributed to the purse to be presented to the assessee. The Revenue in this case has, in our opinion, miserably failed to establish that the receipt arose out of his prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9] 35 ITR 48, the Supreme Court quoted with approval the observations of Rowlatt J. in Reed v. Seymour [1926] 1 KB 588, in which the learned judge posed a question " But is it in the nature of personal gift or is it a remuneration ? " and the further observation which was quoted with approval by Viscount Cave L.C. when the case went up to the House of Lords where an addition was made to the above observations: " If the latter, it is subject to the tax; if the former, it is not." The question in each case, therefore, has to be whether the receipt which is sought to be taxed as income is in the nature of a personal gift or is it a remuneration and on the facts found in the above case, P. Krishna Menon v. CIT [1959] 35 ITR 48, the Supreme Court held that the teaching of vedanta philosophy by the appellant was the carrying on of a vocation and that the amounts received by him were in consideration of the teaching imparted by him and that, therefore, the payments were income arising from the vocation of the appellant therein. No two cases can really be alike and while the principal material for determining as to whether a particular receipt amounts to income or not may be well establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his engagement or is intended to confer a special benefit on him with respect to the services rendered so as to increase his earnings in the exercise of his profession." This court found that the amount was presented to the assessee for the sole purpose of purchasing a house property for the assessee which reflected the appreciation of the personal qualities of the assessee and not the services rendered by the assessee in his capacity as a member of the DMK party. It is important to point out that this court further observed that as he happened to be member of the DMK, it might have facilitated him to render services not only to the development of his party but also to the general public and that there was no material or evidence that the ex-employer belonged to the DMK party and it was not possible to dissect as to which portion of the amount was donated by the partymen and which portion of the amount was donated by the general public. Such situation, according to this court, led to the inference that the donors had intended to make a gift for the personal qualities of the assessee. This decision is an authority for the proposition that merely because a member of a political ..... X X X X Extracts X X X X X X X X Extracts X X X X
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