1996 (2) TMI 21 - HC - Income Tax

Summary

Issues:
1. Whether the receipt of Rs. 12,156 representing Kanikkai and Sambhavanai received by the assessee from his disciples is liable to income-tax?

Analysis:
The High Court of Madras addressed the issue of whether the amount received by the assessee, a religious figure, as Kanikkai and Sambhavanai from his disciples should be considered taxable income under the Income-tax Act. The Tribunal had previously ruled that these receipts were offerings made out of personal regard and veneration, not constituting income from a profession or vocation. The Department argued that as the head of a religious institution, any amount received by the assessee should be taxable. Conversely, the assessee's counsel contended that personal gifts not connected to a profession or vocation should not be taxable.

The court examined the definition of income under the Income-tax Act, emphasizing that income includes items declared in the Act and those signified by their natural import. It noted that voluntary contributions with a specific direction to form part of a trust's corpus were excluded from income. The court distinguished between personal gifts, which are not taxable, and gifts connected to a profession, which are taxable. Referring to legal precedents, the court highlighted that gifts given out of personal regard and veneration, without a professional connection, are not taxable. The court also cited a previous judgment in a similar case involving the same assessee, where it was concluded that offerings made to the Swamiji were not taxable income under the Act.

In conclusion, the court held that the Kanikkai and Sambhavanai received by the Swamiji were voluntary offerings made out of personal esteem and veneration, unrelated to any profession or vocation. As such, these contributions were not considered taxable income under the Income-tax Act. The court referenced earlier decisions and the previous judgment involving the same assessee to support its ruling. Consequently, the court answered the question in the affirmative, ruling against the Department and awarding no costs in the matter.