2014 (2) TMI 184 - HC - Income Tax

Nature of Income - the assessee was instrumental in the election victory of certain candidates and that as a mark of admiration, some amount was given to the assessee - whether business income Held that - The amounts were paid when certain candidates were elected in the election as stated by the assessee This has to be treated as an income from business - As without rendering service, there was no question of assessee getting such amounts from the persons alleged to have given such amounts to the assessee - The Tribunal on a re-appreciation of the evidence as well as the legal issues involved in the matter concurred with the view expressed by the appellate authority as well as the assessing officer there was no substantial question of law arises for consideration in the appeal Decided against Assessee.

Summary

Issues:
1. Whether a sum of 10 lakhs received as a gift from certain persons is taxable under the Income Tax Act.
2. Whether the sum of 10 lakhs gifted to the appellant should be taxed as income under the Income Tax Act for the relevant period.

Analysis:
1. The appellant, an Astrologer, disclosed an income of 1,89,751/- after claiming various expenses in the return of income for the year 2002-03. The appellant showed 10,00,000/- as a contribution from certain persons, claiming it to be exempt. However, the assessing officer did not accept this, leading to an appeal before the Tribunal. The Tribunal upheld the lower authorities' decision, prompting the appellant to raise the issue of the 10 lakhs received as a gift from people of Tamil Nadu not being taxable under the Income Tax Act.

2. The appellant contended that the 10,00,000/- received was a gift from individuals who were grateful for the appellant's accurate prediction of election results in Tamil Nadu. The appellant argued that since the contributions were in the form of a gift, they should not be taxable. The appellant cited judgments in support of this argument. On the other hand, the Commissioner of Income Tax argued that no question of law arose as the assessing officer, appellate authority, and Tribunal had already considered the matter based on factual evidence. They concluded that the 10,00,000/- constituted income from the appellant's business, as he had rendered services in the form of performing rituals and procedures for the individuals who gifted the amount.

3. The High Court analyzed the facts and legal contentions presented by both sides. It noted that the confirmation letters from the contributors mentioned that the amount was given as a mark of admiration for the appellant's role in the election victory of certain candidates. The assessing officer considered this as income from the appellant's business due to the services rendered. The appellate authority and the Tribunal agreed with this view, leading the High Court to conclude that no substantial question of law arose in the appeal. The High Court affirmed the Tribunal's decision, dismissing the appeal as lacking merit.