1995 (2) TMI 65 - HC - Income Tax

Summary

Issues Involved:
1. Taxability of the sum of Rs. 1,05,000 received by the assessee as a gift.
2. Determination of whether the receipt was linked to the assessee's profession/vocation as Khadim.

Summary:

Issue 1: Taxability of the sum of Rs. 1,05,000 received by the assessee as a gift

The Income-tax Appellate Tribunal referred the question of whether the sum of Rs. 1,05,000 received by the assessee from Abu Sufian under a gift deed dated June 22, 1978, was taxable as the assessee's income from his profession/vocation. The assessee, a Khadim at the Dargah of Khwaja Moinuddin Chisti, Ajmer, received the amount from a non-resident pilgrim, Abu Sufian, who had been visiting the Dargah since 1966. The Income-tax Officer initially considered the amount as a gift out of natural love and affection. However, the Commissioner of Income-tax, exercising power u/s 263, cancelled the assessment order, opining that the payment was camouflaged as a gift and was actually linked to the assessee's profession as Khadim.

Issue 2: Determination of whether the receipt was linked to the assessee's profession/vocation as Khadim

The Tribunal concluded that the payment was a voluntary gift made to the assessee for his personal qualities and as a mark of high esteem, with no evidence linking the payment to the routine services rendered by the assessee as Khadim. The Revenue argued that the donation was linked to the service rendered by the assessee and cited various cases to support their stance that such receipts are taxable. However, the court noted that for a receipt to be considered income, there must be a direct link between the receipt and the service rendered.

The court referred to several precedents, including Moorhouse (Inspector of Taxes) v. Dooland, P. Krishna Menon v. CIT, and Dilip Kumar Roy v. CIT, to establish that voluntary payments made on personal grounds or as a mark of personal esteem are not taxable as income from profession/vocation. The court found that the payment was made out of the donor's faith and was not directly related to the assessee's professional services as Khadim.

Conclusion:

The court held that the sum of Rs. 1,05,000 received by the assessee from Abu Sufian under the gift deed dated June 22, 1978, was not taxable as the assessee's income from his profession/vocation. The reference was answered in favor of the assessee and against the Revenue, with no order as to costs.