Effect of withdrawal of tax exemption in respect of receipts of casual and non-recurring nature on liability to tax in respect of gifts - Income Tax - 158/1974

Circular No. 158 Dated 27/12/1974 SECTIONS 10, 11, 12, 12A AND 13 Incomes which do not form part of total income SECTION 10(3)- RECEIPT OF CASUAL AND NON-RECURRING NATURE [CORRESPONDING TO SECTION 4(3)(vii) OF THE 1922 ACT] Effect of withdrawal of tax exemption in respect of receipts of casual and non-recurring nature on liability to tax in respect of gifts 1. Section 10(3) was amended by the Finance Act, 1972 by which receipts of casual and non-recurring nature inexcess of Rs. 1,000 would no longer be exempt from tax. A question has arisen as to whether this amendment would make receipts in the form of gifts liable to income-tax. 2. Receipts which are of a casual and non-recurring nature will be liable to income-tax only if they can properly be characterised as "income" either in its general connotation or within the extended meaning given to the term by the Income-tax Act. Hence, gifts of a purely personal nature will not be chargeable to income-tax except when they can be regarded as an addition to the salary or when they arise from the exercise of a profession or vocation. Circular : No. 158 [F. No. 173/2/73-IT(A-I)], dated 27-12-1974 .