2002 (4) TMI 220 - AT - Income Tax

Summary

Issues Involved:
1. Taxability of the B.D. Goenka Award under Section 10(17A) of the Income Tax Act.
2. Whether the award amount constitutes "income" under the Income Tax Act.
3. Applicability of past judicial decisions to the present case.

Detailed Analysis:

1. Taxability of the B.D. Goenka Award under Section 10(17A) of the Income Tax Act:
The primary issue was whether the B.D. Goenka Award received by the respondent is exempt from tax under Section 10(17A) of the Income Tax Act. Section 10(17A) exempts payments made in pursuance of any award instituted in the public interest by the Central Government, any State Government, or any other body approved by the Central Government. The Assessing Officer argued that the award did not fulfill the conditions specified under Section 10(17A) as it was not approved by the Central Government. The CIT(A) had initially ruled in favor of the respondent, stating that the award was an open one, instituted by an independent entity without any services rendered by the respondent to the Foundation. However, the appellate tribunal concluded that the B.D. Goenka Foundation falls under the category of "any other body," which requires Central Government approval, which was absent in this case. Therefore, the award did not qualify for exemption under Section 10(17A).

2. Whether the award amount constitutes "income" under the Income Tax Act:
The respondent argued that the award amount did not constitute "income" as it was not for any services rendered and was merely a testimonial of recognition. The CIT(A) agreed with this argument, stating that not every receipt could be considered chargeable to tax unless it fell within the expression "income" as contemplated in the I.T. Act. The tribunal, however, disagreed, emphasizing that the existence of Section 10(17A) presupposes that whatever does not fall under the category of "awards" and "rewards" stipulated therein must attract tax. The tribunal held that the initial onus is on the assessee to show that a particular receipt is exempt from tax, and since the respondent failed to do so, the amount should be treated as "income."

3. Applicability of past judicial decisions to the present case:
The respondent relied on several past judicial decisions, including those of the Hon'ble Madras High Court, to argue that the award amount should not be taxed. However, the tribunal found these decisions distinguishable and unrelated to the provisions of Section 10(17A). For instance, in S.A. Ramakrishnan's case, the court ruled that cash presents received on the assessee's 60th birthday were not taxable as there was no material to say that the sum represented remuneration for past performances. Similarly, in C.P. Chitrarasu's case, the court ruled that gifts and contributions received during birthday celebrations were not taxable as income arising from the exercise of a vocation or occupation. The tribunal concluded that these cases did not deal with the specific provisions of Section 10(17A) and, therefore, were not applicable to the present case.

Conclusion:
The tribunal concluded that the sum of Rs. 1 lakh received by the respondent from the B.D. Goenka Foundation is not exempt under Section 10(17A) and should be treated as taxable income. The order of the CIT(A) was reversed, and the appeal of the Revenue was allowed.