INCOME TAX OFFICER v. C.M. PANT
[Citation -1985-LL-0605]

Citation 1985-LL-0605
Appellant Name INCOME TAX OFFICER
Respondent Name C.M. PANT
Court ITAT
Relevant Act Income-tax
Date of Order 05/06/1985
Assessment Year 1980-81
Judgment View Judgment
Keyword Tags value of any benefit or perquisite • profit in lieu of salary • not ordinarily resident • representative-assessee • co-operative society • specific direction • political pension • insurance company • legal obligation • freedom fighter • commuted value • non-resident
Bot Summary: Section 2(45) defines 'total income' as meaning the total amount of income referred to in section 5 of the Act, computed in the manner laid down in the Act. Section 5 deals with the topic 'Scope of total income' and reads as under: Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which- is received or is deemed to be received in India in such year by or on behalf of such person; or accrues or arises or is deemed to accrue or arise to him in India during such year; or accrues or arises to him outside India during such year: Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section of section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India. Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which- is received or is deemed to be received in India in such year by or on behalf of such person; or accrues or arises or is deemed to accrue or arise to him in India during such year. Explanation 2: For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arise to him shall not again be so included on the basis that it is received or deemed to be received by him in India. Sections 2(24), 2(45) and 5 along with the provisions of section 4, the charging section, makes it patently clear that an amount to be subjected to charge of income-tax must fit in within these definitions, but the facts of the case, with which we are seized of do not warrant the inference that the amount can be labeled as 'income', much less, 'total income' it is not chargeable to tax in the hands of the assessee. Admittedly, the position in law is that all receipts by an assessee cannot necessarily be deemed to be the income of the assessee for the purposes of income-tax and the question whether any particular receipt is income or not depends on the nature of the receipt and the true scope and effect of the relevant taxing provision. The legal position, as such, boils down to the fact that before a receipt can be assessed as 'income', the authorities must find it to be an 'income' and they cannot find it so until and unless there be material to justify their stand.


short point for our decision in present appeal filed by revenue in relation to assessment year 1980-81 for which previous year ended on 31-3-1980 is assessment of Rs. 1,260 received by assessee as political pension. At assessment stage, assessee claimed it to be exempt, however, ITO assessed it with narration, 'pension as disclosed'. At first appellate stage, learned AAC held it to be exempt under section 10(17B) of Income-tax Act, 1961 ('the Act'). 2. amount has been received by assessee in terms of pension to political sufferer, since assessee during British regime, as freedom fighter, is said to have been part and parcel of freedom movement and on attaining independence, Government lauded services of freedom fighters and respective State governments as also Central Government sanctioned monetary assistance to political sufferers who have undergone various sentences/imprisonment under British rule. assessee being one of those political sufferers has received amount in question from State of Uttar Pradesh. amount is without any consideration as also without any source, since neither any services has been rendered by assessee to State of Uttar Pradesh nor to any one else. What he has done is, according to dictates of his conscience, having taken part in freedom movement to see his motherland free and independent from yoke of British rule. In fact, as t h e things stand, it was disservice to then British Government and, accordingly, monetary benefit being received by assessee can be said to be without any consideration and without any source, since it entirely depends upon whims of giver and although payment is continuous over long period yet it is voluntary payment given by giver to assessee and assessee has no legal claim, much less, claim to enforce it in Court of law. Under section 4 of Act, which is charging section, income-tax is chargeable on total income of person and charge is to be in accordance with and subject to provisions of Act. With this basis being there, amount received by assessee as monetary benefit in terms of so-called political pension must fit in within definition of 'income' as also 'total income' as defined in section 2(244) and 2(45) of Act. Section 2(24) reads as under: "(24) 'income' includes- (i) profits and gains; (ii) dividends; (iia) voluntary contributions received by trust created wholly or party for charitable or religious purposes or by institution established wholly or partly for such purposes, not being contributions made with specific direction they shall form part of corpus of trust or institution. Explanation: For purposes of this sub-clause, 'trust' includes any other legal obligation; (iii) value of any perquisite or profit in lieu of salary taxable under clauses (2) and (3) of section 17; (iv) value of any benefit or perquisite, whether convertible into money or not, obtained from company either by director or by person who has substantial interest in company or by relative of director or such person, and any sum paid by any such company in respect of any obligation which, but for such payment, would have been payable by director or other person aforesaid; (iv) value of any benefit or perquisite, whether convertible into money or not, obtained by any representative assessee mentioned in clause (iii) or clause (iv) of sub-section (1) of section 160 or by any person on whose behalf or for whose benefit any income is receivable by representative-assessee (such person being hereafter in this sub-clause referred to as 'beneficiary') and any sum paid by representative-assessee in respect of any obligation which, but for such payment, would have been payable by beneficiary; (v) any sum chargeable to income-tax under clauses (ii) and (iii) of section 28 or section 41 or section 59; (va) value of any benefit or perquisite taxable under clause (iv) of section 28; (vi) any capital gains chargeable under section 45; (vii) profits and gains of any business of insurance carried on by mutual insurance company or by co-operative society, computed in accordance with section 44 or any surplus taken to be such profits and gains by virtue of provisions contained in First Schedule; (viii) any annuity due, or commuted value of any annuity paid, under provisions of section 280D; (ix) any winnings from lotteries, crossword puzzles, races, including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever;" 3. Section 2(45) defines 'total income' as meaning total amount of income referred to in section 5 of Act, computed in manner laid down in Act. Section 5 deals with topic 'Scope of total income' and reads as under: "(1) Subject to provisions of this Act, total income of any previous year of person who is resident includes all income from whatever source derived which- (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year; or (c) accrues or arises to him outside India during such year: Provided that, in case of person not ordinarily resident in India within meaning of sub-section (6) of section 6, income which accrues or arises to him outside India shall not be so included unless it is derived from business controlled in or profession set up in India. (2) Subject to provisions of this Act, total income of any previous year of person who is non-resident includes all income from whatever source derived which- (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year. Explanation 1: Income accruing or arising outside India shall not deemed to be received in India within meaning of this section by reason only of fact that it is taken into account in balance sheet prepared in India. Explanation 2: For removal of doubts, it is hereby declared that income which has been included in total income of person on basis that it has accrued or arisen or is deemed to have accrued or arise to him shall not again be so included on basis that it is received or deemed to be received by him in India." 4. reading of above sections, viz., sections 2(24), 2(45) and 5 along with provisions of section 4, charging section, makes it patently clear that amount to be subjected to charge of income-tax must fit in within these definitions, but facts of case, with which we are seized of do not warrant inference that amount can be labeled as 'income', much less, 'total income', hence, it is not chargeable to tax in hands of assessee. Admittedly, position in law is that all receipts by assessee cannot necessarily be deemed to be income of assessee for purposes of income-tax and question whether any particular receipt is income or not depends on nature of receipt and true scope and effect of relevant taxing provision. income-tax authorities cannot assess all receipts, since they can assess only those receipts which amount to 'income'. legal position, as such, boils down to fact that before receipt can be assessed as 'income', authorities must find it to be 'income' and they cannot find it so until and unless there be material to justify their stand. In case of assessee, amount received by him is for no services to State of Uttar Pradesh, much less, to Government of India. Accordingly, amount is 'dole', i.e., receipt without any consideration and since it is 'dole', it cannot be said to have any source. payment depends entirely on whims of State of Uttar Pradesh, hence, receipt cannot be termed to be 'income' and, accordingly, cannot be brought into mischief of provisions of provisions of Act, for being charged to tax. If any authority is required for proposition, then Mehboob Productions (P.) Ltd. v. CIT [1977] 106 ITR 758 (Bom.), Lal Chand Gopal Das v. CIT [1963] 48 ITR 324 (All.) at p. 336 and Siddhartha Publications (P.) Ltd. v. CIT [1981] 129 ITR 603 (Delhi) are in point. 5. net result is that revenue fails and receipt of amount by assessee from State of Uttar Pradesh as political pensioner is held not to be falling within ambit of word 'income' as envisaged in Act. appeal fails. Per Shri K.C. Srivastava, Accountant Member-While agreeing with conclusion recorded by learned Judicial Member, I would add that token payment made to assessee was with sole purpose of honouring freedom fighter. He had no legal right to receive it and it was not 'pension' for any service rendered. Naming it as 'pension' is not at all material. It was gift by State Government. Thus, this was casual payment. voluntary payment made without consideration, even if it is paid continuously over period, is not income if it depends solely on whim or sweet will of payer. It w s held by Bombay High Court in case of H.H. Maharani Shri Vijaykuverba Saheb of Morvi v. CIT [1963] 49 ITR 594 at p. 605 that such voluntary payment which cannot be traced to any source but only to whim of donor cannot be considered as income. That being legal position it is hoped that as policy no effort should be made to bring such small payments made to freedom fighters to tax. *** INCOME TAX OFFICER v. C.M. PANT
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