2015 (5) TMI 213 - HC - Income Tax

Receipt of fees after Discontinuation of legal profession after being elevated to the post of Judge of High Court - Taxability of income under the head 'Income from business or professions' - whether Tribunal fell into error in its consideration of Section 176(4)and holding that a sum of ₹ 67,86,669/- reported by the assessee in AY 2009-10 would not be subjected to tax - Held that - Having regard to the previous rulings, judgments of this Court and the reasoning adopted and with the omission to carry forward things to bring to tax such amounts by indicating the relevant head of income under section 14, the question is fairly well-settled. This is also in accord with the ruling of the Supreme Court in CIT v. Ajaz Products Ltd.(1964 (10) TMI 21 - SUPREME Court) that the subject is not to be taxed unless the charging provision clearly says so. This view has been followed by the Tribunal in this case. One has to look merely at what is clearly said, nothing is to be read in, nothing is to be implied, there being no room for any intendment, one can only look fairly at the language used. See CIT vs. Justice R.M. Datta of Calcutta High Court 1989 (7) TMI 59 - CALCUTTA High Court We are further of the opinion that the view expressed by the Tribunal is in conformity with the opinion of several High Courts and its own Benches in different States; furthermore, the revenue itself has not thought it appropriate to carry the matter in appeal to the Supreme Court, thus accepting the ruling. The court is also of the opinion that the Tribunal's reasoning does not call for any interference. - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of Section 176(4) of the Income Tax Act regarding taxation of income received by an assessee after discontinuance of profession.
2. Application of legal fiction in determining the head of income under Section 14 for tax purposes.
3. Consideration of previous rulings and judgments in similar cases.
4. Compliance with the charging provision for taxation as per Supreme Court rulings.

Analysis:
1. The main issue in this case revolves around the interpretation of Section 176(4) of the Income Tax Act concerning the taxation of income received by an assessee after the discontinuance of their profession. The revenue contended that the Tribunal erred in its consideration of this section and its application in the case, specifically regarding a sum of Rs. 67,86,669 reported by the assessee in the assessment year 2009-10. The AO sought to add this amount to the income as 'income from profession,' but the Commissioner (Appeals) accepted the appeal, leading to the revenue appealing to the ITAT without success.

2. The CIT(Appeals) and the Tribunal considered the revenue's contentions along with previous decisions from various High Courts, such as the Calcutta High Court and the Punjab and Haryana High Court. The Tribunal emphasized the importance of Section 4 and Section 14 of the Income Tax Act in determining the classification of income under different heads for tax computation purposes. The Tribunal's reasoning highlighted the need to adhere to the clear language of the statute and not introduce additional interpretations beyond what is explicitly stated in the law.

3. The Court acknowledged the previous rulings and judgments, including those from the Supreme Court, supporting the principle that the subject should not be taxed unless the charging provision unambiguously imposes such an obligation. The Tribunal's decision was found to be in line with the opinions of various High Courts and its own Benches in different states. Additionally, the fact that the revenue did not appeal the matter to the Supreme Court further reinforced the acceptance of the Tribunal's ruling.

4. Ultimately, the Court dismissed the appeal, stating that no substantial question of law arose from the Tribunal's decision. The judgment emphasized the importance of following the clear language of the law and the established legal principles in interpreting tax provisions, especially when dealing with the taxation of income received by an assessee after the discontinuance of their profession.