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TMI Blog1960 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... nt facts are shortly stated below. For the assessment year 1946-47, one Pandit Thakurdas Bhargava, an advocate of Hissar and respondent before us, was assessed to income-tax on a total assessable income of Rs. 58,475 in the account year 1945-46. This sum included the amount of Rs. 32,500 stated to have been received by the respondent in July, 1945, for defending the accused persons in a case known as the Farrukhnagar case. The assessee claimed that the said amount of Rs. 32,500 was not a part of his professional income, because the amount was given to him in trust for charity. This claim of the assessee was not accepted by the Income-tax Officer, nor by the Appellate Assistant Commissioner who heard the appeal from the order of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sum of Rs. 32,500 from the assessment." The appellant then moved the Tribunal for stating a case to the High Court on the question of law which arose out of the order of the Tribunal. The Tribunal was of the opinion that a question of law did arise out of its order, and this question is formulated in the following terms : "Whether the sum of Rs. 32,500 received by the assessee in the circumstances set out in the trust deed later executed by him on August 6, 1945, was his professional income taxable in his hands or was it money received by him on behalf of a trust and not in his capacity as an individual ?" It appears that in stating a case the Tribunal framed an additional question as to whether the trust was created at or before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the accused expressed a strong desire to get the case conducted by me during its trial. At last, on their persistence and promise that they would provide me with Rs. 40,000 for charitable purposes and I would create a public charitable trust thereof I agreed to conduct the case. The case is now over. The accused and their relatives have given me Rs. 32,500 for charity and creating a trust. The said amount has been deposited in the bank. If they pay any other amount that will also be included in that. Accordingly, I create this trust with the following conditions and with the said amount and any other amount which may be realised afterwards or included in the trust (then followed the name and objects of the trust etc.). The Tribunal accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of the appellant it has been contended that the inference which the Tribunal and the High Court drew is not the proper legal inference which flows from the facts found, and according to the learned Attorney-General who appeared for the appellant, the proper legal inference is that the amount was received by the assessee as his professional income in respect of which he later created a trust by the deed of trust dated August 6, 1945. He has submitted that there was no trust nor any legal obligation imposed on the assessee by the persons who paid the money, at the time when the money was received, which prevented the amount from becoming the professional income of the assessee. He has also contended that even the existence of a trust will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust or an obligation. They were anxious to have the services of the assessee in the Farrukhnagar case ; the assessee was at first unwilling to give his services and later he agreed proposing that he would himself create a charitable trust out of the money paid to him for defending the accused persons in the Farrukhnagar case. The position is clarified beyond any doubt by the statements made in the trust deed of August 6, 1945. The assessee said therein that he was reserving his professional income as an advocate accruing after June, 1944, for payments of taxes and charity and, accordingly, when he received his professional income in the Farrukhnagar case he created a charitable trust out of the money so received. The clear statement in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner was the correct. view. The money when it was received by the assessee was his professional income, though the assessee had expressed a desire earlier to create a charitable trust out of the money when received by him. Once it is held that the amount was received as his professional income, the assessee is clearly liable to pay tax thereon. In our opinion, the correct answer to the question referred to the High Court is that the amount of Rs. 32,500 received by the assessee was professional income taxable in his hands. Learned counsel for the respondent has referred us to a number of decisions where the principle laid down in Bejoy Singh Dudhuria's case was applied, and has contended that where there is an allocation of a sum out of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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