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TMI Blog1989 (12) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... Khilton lights 43,212.35 18-2-1981 60 KVA Generating Set Comprising Kirloskar alternator Leyland Engine 90,080.00 With references to the aforesaid data, we have to clarify in respect of the item which appears as duty on Arsi Camera , that in respect of the cost of the camera itself no investment allowance is claimed. This is because, according to the assessee, the camera was received as a gift. The ITO, however, had brought the value of the camera to tax under the head "business income by invoking the provisions of s. 28 (iv) of the IT Act, 1961 and the value so assessed as income was Rs. 1,73,670. We shall deal with this aspect when we come to the ground of appeal relating to the same. 3. The investment allowance claimed is 25% of the aggregate value of the machinery of Rs. 2,70,646. The claim for the investment allowance was allowed by the ITO on the ground that the condition of the machinery having been wholly used for the purposes of business carried on by the assessee was not satisfied. According to the ITO the assessee had only lent the equipements on hire to third parties and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a subsidiary business. 9. In the case of FIRST LEASING CO. OF INDIA LTD., the Tribunal had observed as under at pages 252 and 253 of 13 ITD: "The assessee is entitled to the investment allowance in the year of installation of machinery. There is the further option of having such allowance otherwise in the year in which the machinery is first put to use. Even if it is argued that the Act of letting out of the machinery is not use of the machinery by the assessee still investment allowance cannot be denied because the assessee is entitled to the grant of such allowance on the basis installation. It is also not easy to say that machinery when it is let out is not used for the purposes of business because it is on this basis depreciation has been allowed under s. 32 of the Act. No bar is, therefore, seen to the grant of investment allowance on the ground that any of the requirements of s. 32A(1) are not satisfied. Sec. 32A(2) specifies in the case of new ship or aircraft for getting investment allowance the assessee should be engaged in the operation of ships or aircraft. The further requirement of the nature of the business which the assessee concerned should be carrying on has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal to assess the value of the benefit under s. 28 (iv). Though the assessee was given time upto 21st March, 1985, it has not so far objected to the above proposal. Value of the Camera and accessories as per Customs Duty Order comes to Rs. 1,73,670. This is included under the head "Business" and assessed Rs. 1,73,670." The assessee did not succeed before the CIT(A) who held that the camera was not a gift in the legal sense because there was adequate consideration for the same. Since the assessee had co-operated and helped the Ceylonese parties during the course of the shooting of the film, the ITO, it was held had rightly taken the value of the camera as the assessee s business profit. 11. In order to appreciate the rival contentions, it is necessary to bring on record certain facts which we ascertained at the appellate stage before us. There was an agreement dt. 30th May, 1980 entered into between the assessee on the one side and M/s. The Maharaja Organisation Limited, a company incorporated in Colombo on the other side. To this agreement the assessee is the party of the first part and M/s. The Maharaja Organisation Ltd., (hereinafter to be referred as Maharaja) is the party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,800 per print. In India the price was about Rs. 16,000 excluding excise duty. 14. On 18th Dec., 1980 Maharaja gave a declaration as under: "TO WHOM IT MAY CONCERN This is to confirm that we are pleased to gift to M/s. Suresh Arts of New Theatre Building, P.O. Box 405, Trivandrum, a new Arriflex 35 III Camera with accessories as per description in Invoice EC 056 of Chemway (U.K.) Ltd., London dated 10th Dec., 1980, except item No. 22 (High Speed Cable), the total value of which is around 8,500. The gift is being made by this Organisation to Suresh Arts in consideration of our deep appreciation of the co-operation and help given by them in shooting the feature film co-production in Sri Lanka. 90% of the shooting of this film was done in this country in the record time of 37 days and it is in acknowledgement of this co-operation and to continue our good relationships for the future that we make this gesture. Sd/- (R. Maharaja) MANAGING DIRECTOR" What was brought to tax as income of the assessee was the value fixed by the Customs authority of this camera, which came to Rs. 1,73,670. 15. The submission of the learned counsel before us was that an analysis of the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears later of over 33 acres of land stating that it was to show his feeling of gratitude. The court held that the service rendered by the doctor was not the causa causans of making the gift by the donor. The finding was that it should be treated only as a gift made out of personal esteem. 18. Referring to the later decision of the Madras High Court in C.P. CHITRARASU vs. CIT (1986) 53 CTR (Mad) 31 : (1986) 160 ITR 534 (Mad), it was stressed that: "A receipt does not necessarily arise from the exercise of a profession or vocation merely because the profession or vocation affords an opportunity for earning the receipt." Another case (not referred to in the decision of Balamuralikrishna) relied on by the learned counsel was the decision of the Supreme Court in MAHESH ANANTRAI PATTANI AND ANOTHER vs. CIT (1961) 41 ITR 481 (SC), where a payment of Rs. Five lakhs made by the Maharaja of Bhavnagar to the ex-Dewan was held by majority to be not taxable. Learned counsel sought to distinguish the case of P. KRISHNA MENON vs. CIT (1959) 35 ITR 48 (SC) stating that it stood on a different footing, because, on the facts it was found in that case that the payment made to Krishna Menon was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly because it was considered to be a personal testimony. The purported gift of the Video camera now under consideration, the learned departmental representative submitted, was not only article stated to have been gifted in this year and the Revenue was conscious of, and did make a differentiation between the two types of transactions. 20. The learned departmental representative then adverted to the decision of the Calcutta High Court in the case of DAVID MITCHEL vs. CIT (1956) 30 ITR 701 (Cal) and submitted that the payment there was not in pursuance of any agreement or contract but was still held to be taxable as remuneration for services rendered. Other decisions relied on were those of the Calcutta High Court in the case of AMARENDRA NATH CHAKRABORTY vs. CIT (1971) 79 ITR 342 (Cal) and of the Madras High Court in the case of LAKSHMI RAJYAM vs. CIT (1960) 40 ITR 340 (Mad). 21. The learned departmental representative concluded by placing all emphasis on the plain language of s. 28 (iv) of the IT Act, 1961 which reads as under:-- "28. The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession",..... (iv) the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Sri Lanka. 90% of the shooting of this film was done in the country in the record time of 37 days and it is in acknowledgement of this co-operation and to continue our good relationships for the future that we make this gestrue. " The camera was given not only as acknowledgement of co-operation in finishing the shooting of the film in a record time of 37 days in Sri Lanka, which resulted in a saving to Maharaja. The saving to Maharaja would of course not represent income to the assessee. If the letter had stopped there, it could well even be construed as a testimonial payment for an once and for all exertion put in by the assessee, beyond the call of the terms of the contract, or beyond all the commercial considerations required of the assessee. However, the letter goes on to state that the camera was given also, "to continue our good relationship for the future". This would imply that the camera was given also as a spur to ensure closer co-operation in working between the assessee and Maharaja in future, which would also include the unfinished portion of the existing contract, and which would not rule out Maharaja expecting to enter into business contracts with the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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