1986 (3) TMI 39 - HC - Income Tax

Summary

Issues Involved:
1. Whether the receipts of pranamis were casual and non-recurring and exempt under section 10(3) of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Nature of Pranamis:
The primary issue was whether the pranamis received by the assessees, Smt. Sarbamangala Devi and Dr. P. R. Chakravarty, were casual and non-recurring and thus exempt under section 10(3) of the Income-tax Act, 1961. The assessees argued that these amounts were gifts received from different disciples and followers of the satsang, given out of reverence, love, and affection, and thus should be treated as casual and non-recurring.

2. Income-tax Officer's Findings:
The Income-tax Officer (ITO) included the pranami amounts in the income of the assessees, arguing that the receipts were from disciples of the satsang, constituting a source in a group, and that the disciples considered it a religious duty to give pranamis to the "Guru Charana" and his family, thus making it a recurring source of income.

3. Appellate Assistant Commissioner's Decision:
The Appellate Assistant Commissioner (AAC) deleted the additions made by the ITO, following the Tribunal's previous orders which held that such receipts were casual and non-recurring. The AAC emphasized that the assessees were not preachers of the satsang cult and therefore, the receipts did not arise from the exercise of a profession.

4. Tribunal's Findings:
The Tribunal upheld the AAC's decision, noting that the receipts were spontaneous, without pre-thought, pre-design, purpose, or motive, and thus could not be considered as arising from a vocation. The Tribunal found that there was no regularity or anticipated recurrence of such offerings, making them casual and non-recurring.

5. Legal Precedents and Arguments:
The Revenue relied on several decisions, including P. Krishna Menon v. CIT, Ramanathan Chettiar v. CIT, and Amarendra Nath Chakraborty v. CIT, arguing that the receipts were not casual and non-recurring. However, these cases involved facts where the receipts arose from business, profession, or occupation, which was not applicable to the present case as the assessees were employees of the satsang, not preachers.

6. Assessees' Arguments:
The assessees relied on decisions such as Rani Amrit Kunwar v. CIT, H.H. Maharaja Rana Hemant Singhji v. CIT, and Dilip Kumar Roy v. CIT, which supported the view that gifts made out of personal esteem and veneration, without legal obligation, are casual and non-recurring and thus not taxable.

7. High Court's Conclusion:
The High Court concluded that the pranamis were gifts made by different persons out of reverence, love, and affection for the assessees as the widow and son of the Guru. The court emphasized that there was no legal obligation on the disciples to make these gifts, and they depended on the sweet will of the donors. Thus, the amounts were of a casual and non-recurring nature and not taxable.

8. Circular No. 158:
The court also referred to Circular No. 158, which clarified that gifts of a purely personal nature are not chargeable to income-tax unless they can be regarded as an addition to the salary or arise from the exercise of a profession or vocation. The court held that the circulars issued under section 119 of the Act are binding on the Department.

Final Judgment:
The High Court affirmed that the Tribunal was correct in law in holding that the receipts of pranamis were casual and non-recurring and exempt under section 10(3) of the Act. The question was answered in the affirmative and in favor of the assessees, with no order as to costs.