1971 (3) TMI 18 - HC - Income Tax

Assessee a medical practitioner and skin specialist - expenditure incurred in connection with his foreign tour was a revenue expenditure entitled to deduction in computing his professional income - assesse an tenant of flat receiving the amount from occupants is casual and non-recurring nature exempt from tax under section 4(3)(vii) of the Indian Income-tax Act 1922

Issues Involved:
1. Whether the expenditure of Rs. 5,282 incurred by the assessee in connection with his foreign tour was a revenue expenditure entitled to deduction in computing his professional income.
2. Whether the sum of Rs. 3,000 received by the assessee was a receipt of a casual and non-recurring nature exempt from tax under section 4(3)(vii) of the Indian Income-tax Act, 1922.

Detailed Analysis:

Issue 1: Deductibility of Foreign Tour Expenditure
The assessee, a medical practitioner specializing in skin diseases, claimed Rs. 5,682 as expenses incurred during a foreign tour to attend the International Congress of Dermatology. The Income-tax Officer disallowed the entire expenditure, deeming it capital in nature, as it ostensibly furthered the assessee's knowledge, thus creating an enduring advantage. Additionally, the lack of verifiable vouchers for Rs. 1,650 in hotel expenses was noted.

The Appellate Assistant Commissioner, relying on the Madras High Court decision in Dr. P. Vadamalayan v. Commissioner of Income-tax, allowed the expenditure as revenue in nature. The Tribunal upheld this view, recognizing the tour as a study lecture tour, thus aligning with the principles established in Dr. P. Vadamalayan's case. The Tribunal, however, disallowed Rs. 400 as personal expenditure, allowing the remaining Rs. 1,250 under section 10(2)(xv) of the Act.

The High Court referenced the decision in Commissioner of Income-tax v. Dr. M. S. Shroff, noting the similarity in facts and reaffirming that attending professional conferences can advance one's business or profession. The Court distinguished the Mysore High Court decision in Commissioner of Income-tax v. Dr. B. V. Raman, emphasizing that the primary purpose of the assessee's tour was professional advancement, not merely attending a conference. Consequently, the High Court concluded that the expenditure was indeed revenue in nature and allowable as a deduction.

Issue 2: Nature of Rs. 3,000 Receipt
The assessee received Rs. 3,000 from an American family for allowing them to use his flat on a caretaker basis during his absence. The Income-tax Officer added this amount to the assessee's income from undisclosed sources, as no supporting evidence was initially provided. However, the Appellate Assistant Commissioner accepted a letter from Shri O. P. Singhal, confirming the arrangement, and deleted the addition.

The Tribunal upheld this deletion, concluding that the receipt was casual and non-recurring, thus exempt under section 4(3)(vii) of the Act. The Tribunal emphasized that the assessee was not the flat's owner and had never sublet it before, making the receipt fortuitous and exceptional.

The High Court examined the definitions of "casual" and "non-recurring," emphasizing that a casual receipt must be accidental and not anticipated. It referenced various cases, including Chunni Lal Kalyan Das and Rani Amrit Kunwar v. Commissioner of Income-tax, to elucidate the meaning of these terms. The Court noted that the assessee's arrangement was a one-time, fortuitous event, lacking any regularity or anticipation, thus fitting the definition of a casual and non-recurring receipt.

The High Court concluded that the Tribunal correctly classified the Rs. 3,000 receipt as casual and non-recurring, exempting it from tax under section 4(3)(vii).

Conclusion:
Both questions were answered in favor of the assessee. The expenditure on the foreign tour was deemed revenue in nature and deductible, while the Rs. 3,000 receipt was classified as casual and non-recurring, thus exempt from tax. The assessee was awarded costs, with counsel's fee set at Rs. 200.

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