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TMI Blog2009 (8) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... V., ARAVIND KUMAR, JJ JUDGMENT Aravind Kumar J.- This appeal by the Revenue under section 260A of the Income-tax Act, 1961 (Act, for short) is against the order dated December 15, 2003 passed by the Income-tax Appellate Tribunal, Bangalore Bench-B in IT(SS)A No. 49/Bang/2003 relating to the block assessment period April 1, 1990 to July 14, 2000. 2. The assessee is an individual. OnJuly 14, 2000search was conducted in the residential premises of the assessee and statement came to be recorded onJuly 14, 2000and onJuly 24, 2000under section 132(4) of the Act. The assessee was also cross examined by one Dr. K. R. Paramahamsa. The assessee pursuant to the said search filed return for the block periodApril 1, 1990toJuly 14, 2000onApril 24, 2001declaring undisclosed income as nil. During the course of search proceedings the assessee had admitted that he had received from Dr. K. R. Paramahamsa, chairman of Paramahamsa Foundation and Trust,Bangalorea sum of Rs. 42 lakhs for relinquishing his life membership and secretary ship in Jayanagar Education Society. On verification by the authorities it was found that the Jayanagar Education Society, Bangalore had been started durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the contentions raised by the appellant/assessee rejected the same and held that it is to be treated as revenue receipt and confirmed the finding of the Assessing Officer who had treated the same as "undisclosed income" for the block period by order dated September 13, 2002. 6. Aggrieved by the same the assessee filed further appeal before the Tribunal assailing the same and by raising the following grounds : (i) The amount of Rs. 37,54,266 is to be treated as capital receipt and not revenue receipt. (ii) The finding of the first appellate authority in stating that the receipt can be termed as goodwill is erroneous in law and there was no admitted sale of any goodwill. 7. The Tribunal after considering the contentions raised by the assessee and the case law relied on there under came to the conclusion that the amount of Rs. 37,54,266 is capital in nature and accordingly allowed the appeal and reversed the findings of the first appellate authority who had confirmed the finding of the Assessing Officer. 8. Aggrieved by the same, the Revenue has filed the present appeal by raising the following substantial questions of law : "Whether the Tribunal is correct in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted therein that Rs. 35,00,000 received from Dr. K. R. Paramahamsa is treated as capital receipt. However, the Assessing Officer brought the same amount under income from "other sources" and taxed the entire sum of Rs. 45,20,420 as total undisclosed income without giving any deductions. This assessment order was carried in appeal before the Commissioner of Income-tax (Appeals) which resulted in a sum of Rs. 2,57,000 being deleted which had been added by the Assessing Officer as unexplained investment. The assessee carried in further appeal before the Tribunal and the Tribunal held that the sum of Rs. 37,54,266 is referable to the relinquishment of the post of honorary principal ship and admittedly the appellant had worked as full time head master for a substantial period till his retirement in 1991. The intrinsic link between the profession and avocation of the appellant stands established and concluded that the said receipt is directly referable to the profession/avocation and relied upon the judgment in P. Krishna Menon v. CIT [1959] 35 ITR 48 (SC) wherein it had been held that teaching is an avocation if not a profession and teaching "Vedanta" is just as much teaching as any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition in the society. In this regard the decision in the matter of CIT v. H. R. Honnappa (Individual) [1989] 180 ITR 660 (Karn) has been to relied upon. In the said case a Member of Legislative Assembly was handed over as purse/money collected by the admirers for purchasing a car and it was considered as a capital receipt. The said decision would be of no assistance to the respondent assessee, in the instant case since it is distinguishable both on facts and on law for the following reasons. (i) That was a case where the consideration paid to the MLA was on account of personal character i.e., for rendering services to the constituency in general and there was no quid pro quo for services rendered by the MLA to the contributors. Whereas in the instant case it is by the way of quid pro quo namely to give up the post the assessee was holding amount was paid and hence it cannot be characterized as money paid towards rendition of any services (ii) In the instant case the money was paid by a third person namely Dr. K. R. Paramahamsa to induce the assessee to give up the secretary ship or life membership. Hence the citation above referred to relied upon by the learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id judgment in inapplicable to the facts of the case. 18. In so far as the Karam Chand Thapar's case [1971] 80 ITR 167 (SC) referred to at No. (ii) it was a case of termination of one of the several managing agencies managed by the assessee and compensation paid on such termination was held to be capital receipt. It has also been held in the said decision that the Department has to establish the case within the exception to the ordinary rule. In the instant case the first appellate authority namely Commissioner of Income-tax (Appeals) has examined the nature of receipt in the hands of the respondent assessee and came to the conclusion that it is a revenue receipt. We do not find any good reason to deviate from the said finding of fact. The third decision which is referred to above is pressed into service to contend goodwill when sold for consideration it becomes capital value of the asset not profit or gain. This ground ought to fail inasmuch as it was the specific contention of the assessee before the first appellate authority in the grounds raised namely ground No. 3 which reads as follows: iii. That the learned Commissioner of Income-tax (Appeals) erred in stating that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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