1969 (3) TMI 29 - HC - Income Tax

Gift received by Guru from his disciples - gifts was a receipt by the assessee in carrying on of his vocation as a religious teacher - taxability

Summary

Issues Involved:
1. Taxability of the gift of land received by the assessee.
2. Interpretation of Section 4(3)(vii) of the Indian Income-tax Act, 1922.
3. Applicability of judicial precedents.

Detailed Analysis:

1. Taxability of the Gift of Land Received by the Assessee:
The core issue revolves around whether the gift of land received by the assessee, a religious preacher, constitutes taxable income. The assessee received a piece of land valued at Rs. 40,000 (later estimated at Rs. 60,000 by the Income-tax Officer and reduced to Rs. 42,500 by the Tribunal) from Charubala Dasi. The Income-tax Officer, Appellate Assistant Commissioner, and the Tribunal all held that this gift was a professional receipt arising from the assessee's vocation as a religious teacher and, therefore, taxable.

The Tribunal's decision was based on the recitals in the deed of gift, which explicitly stated that the donor received mental enlightenment and spiritual benefit from the assessee's preaching, leading to the gift. This connection between the gift and the assessee's professional activities as a preacher was deemed sufficient to classify the gift as taxable income.

2. Interpretation of Section 4(3)(vii) of the Indian Income-tax Act, 1922:
Section 4(3)(vii) exempts certain receipts from being included in total income if they are of a casual and non-recurring nature and not arising from business, profession, vocation, or occupation. The judgment emphasized that if the receipt arises from the exercise of a profession or vocation, it does not qualify for this exemption.

The court examined the deed of gift and concluded that the gift was directly linked to the assessee's professional activities. The donor explicitly stated that the gift was in consideration of the spiritual benefits received from the assessee's preaching. Therefore, the receipt did not enjoy the exemption under Section 4(3)(vii) and was taxable.

3. Applicability of Judicial Precedents:
The court referred to several precedents to support its decision:

- David Mitchell v. Commissioner of Income-tax: This case established that unsolicited gifts received in appreciation of professional services are taxable. The court found parallels in the present case, where the gift was in appreciation of the assessee's preaching services.

- P. Krishna Menon v. Commissioner of Income-tax: The Supreme Court held that teaching Vedanta was a vocation, and gifts received in consideration of such teaching were taxable. The court applied this principle, affirming that the assessee's preaching was a vocation and the gift was taxable income arising from this vocation.

- Mahesh Anantrai Pattani v. Commissioner of Income-tax: This case was distinguished as the gift was a personal token of esteem and not related to professional services. In contrast, the present case involved a gift directly linked to professional activities.

- Parimisetti Seetharamamma v. Commissioner of Income-tax: This case dealt with the burden of proof regarding the nature of receipts. The court found it irrelevant as the deed of gift in the present case clearly linked the gift to the assessee's professional activities.

Conclusion:
The court concluded that the value of the land received by the assessee was taxable income arising from his vocation as a religious teacher. The answer to the referred question was in the affirmative, and the assessee was ordered to pay the costs of the reference to the Commissioner.

Question answered in the affirmative.