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Taxability of car gifted to the assessee by the people of his constituency as income under the Income-tax Act. Analysis: The case revolved around whether the value of a car gifted to the assessee by the people of his constituency should be considered taxable income under the Income-tax Act. The Income-tax Officer initially included the gift amount in the assessee's income, considering it remuneration for services rendered. The appellate authority upheld this decision, citing section 2(24)(va) of the Income-tax Act. However, the Tribunal ruled that the car gift was a personal gesture and not taxable income. The Revenue contended that the gift was linked to the services rendered by the assessee, citing legal precedents. They argued that even political activities could be considered a profession, making such gifts taxable under section 28(iv) of the Income-tax Act. The court analyzed whether the gift was connected to the assessee's profession or merely a token of personal esteem. They emphasized that the gift was not in exchange for services but a recognition of personal qualities. The court distinguished the case from legal precedents where gifts were linked to specific services rendered. They highlighted that the gift was not remuneration for services to individuals or a political party but a mark of esteem for the assessee's general service to the constituency. Relying on past judgments, including CIT v. S. A. Rajamanickam and Dilip Kumar Roy v. CIT, the court concluded that the gift was a windfall and not taxable income. The court rejected the Revenue's reliance on previous cases involving different circumstances, emphasizing the unique nature of the gift in this case. In conclusion, the court ruled in favor of the assessee, stating that the gift of the car was not taxable as income. The court's decision was based on the understanding that the gift was a mark of personal esteem and not linked to specific services rendered. The judgment provided clarity on the taxability of gifts received in recognition of personal qualities, distinguishing them from income earned through professional services.
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