1964 (9) TMI 55 - HC - Income Tax

Summary

Issues Involved:
1. Taxability of Rs. 2,000 per month set aside for personal use by the Acharya.
2. Taxability of household expenses incurred by the trust for the Acharya.

Issue-wise Detailed Analysis:

1. Taxability of Rs. 2,000 per month set aside for personal use by the Acharya:
The court examined whether the sum of Rs. 2,000 per month, set aside for the Acharya's personal use under clause 16(i) of the scheme, constitutes taxable income. The court noted that the amount is a revenue receipt, accruing to the Acharya by virtue of his office. The court emphasized that the sum is given to the Acharya in his capacity as the spiritual head of the Sampradaya and is a monthly payment accruing to him by reason of his office. The court explained that even voluntary payments made because of the office or vocation of the donee are considered income and are taxable. The court rejected the argument that the payment was a capital receipt for the relinquishment of the right to Nam Vero and Bhets, stating that the source of Nam Vero and Bhets was the office of Acharya, which continued to exist. The court concluded that the sum of Rs. 2,000 per month is income liable to be taxed as such in the hands of the Acharya.

2. Taxability of household expenses incurred by the trust for the Acharya:
The court addressed whether the household expenses defrayed out of the trust's funds for the Acharya should be included in his taxable income. The court noted that income for tax purposes must be money or money's worth, capable of being converted into terms of money. The court explained that benefits or advantages received by an assessee are assessable if they consist of money or money's worth. The court found no evidence that the Acharya incurred pecuniary obligations in his individual capacity for the household expenses, which were then discharged by the trust. The court emphasized that the trust's obligation to defray these expenses was based on the principle that the Acharya is an essential part of the institution, and his maintenance is a duty of the institution. The court concluded that the benefits received by the Acharya in the form of household expenses do not represent money's worth and are not assessable as income.

Conclusion:
The court answered the first question affirmatively, stating that the sum of Rs. 2,000 per month received by the Acharya is taxable income. The second question was answered negatively, indicating that the household expenses incurred by the trust for the Acharya are not taxable in his hands. Each party was ordered to bear their own costs of the reference.