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TMI Blog1987 (8) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... non-recurring nature not falling under any of the provisos to section 10(3). In the alternative, it was claimed that in case the said receipt was treated as assessable income, he was entitled to a deduction of 25 per cent. therefrom as expenses incurred by him in helping M/s. Universal Tyres Ltd. also a Birla concern-in the sale of its shares and in the setting up of a factory owned by that company at Naini. The Income-tax Officer negatived the assessee's claim for exemption of the said receipt of Rs. 25,000 from tax holding that the amount paid to the assessee by m/s. Universal Tyres Ltd., for helping it in the sale of its shares formed part and parcel of the assessee's normal and regular business and hence liable to be taxed. The Income-tax Officer, however, allowed a deduction of ten per cent. instead of 25 per cent. claimed by the assessee from that receipt as expenses. In this way, the Income-tax Officer made an addition of Rs. 22,500 to the assessee's income. The assessee appealed before the Appellate Assistant Commissioner but without any success. The Appellate Assistant Commissioner held that the aforesaid amount had been paid to the assessee for having rendered specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pts which are of a casual and non-recurring nature not being winnings from lotteries, to the extent such receipts do not exceed one thousand rupees in the aggregate : Provided that this clause shall not apply to (i) capital gains chargeable under the provisions of section 45; or (ii) receipts arising from business or the exercise of a profession or occupation; or (iii) receipts by way of addition to the remuneration of an employee. " It may be mentioned that the Department did not seek to rely on clauses (i) and (iii) of sub-section (3) of section I 0. Consequently, if we come to the conclusion that the payment of Rs. 25,000 was a receipt which was of a casual and non-recurring nature, the question remaining for consideration would be whether the receipt comes under clause (ii) of sub-section (3) of section 10, i.e., whether it arose from any business of the assessee or from exercise by him of any profession or occupation. The words " casual " and " non-recurring " have not been defined in the Act and they must, therefore, receive their plain and ordinary meaning. In the Oxford Universal Dictionary, the word " casual " has been defined as meaning: " (i) subject to or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the negative holding that the receipt of the shares by the assessee was in the nature of a windfall. It was casual and non-recurring in nature and hence clearly exempt from tax under section 4(3)(vii) corresponding to section 10(3) of the 1961 Act. This is how their Lordships stated the law ([1938] 6 ITR I at page 7) : " We have to see whether the allotment of shares is income within the meaning which has been assigned to that term by their Lordships of the Privy Council or whether it can be described as a mere windfall. We do not think there can really be any doubt upon this question. The applicant was not an employee of the Pipraich Sugar Factory Limited., although it appears from the reference that his employer, Syed Jawad Ali Shah, was one of the shareholders in the company. This payment was not made by the company to one of its employees for services rendered. The applicant was not in any way carrying on the vocation of a Promoter of companies or a share-broker of anything of that kind. He did not enter into any contract with the company by which the company Promised him remuneration for assisting in the disposal of shares. It may be that the applicant was actuated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not also be held to be an adventure in the nature of trade as the material on record does not suggest that any machinery was set up by the assessee for the purpose. He was single-handedly helping the said company under a moral obligation as he was in a way connected with a number of Birla concerns in the capacity of trader." The above finding clearly establishes that the payment in question was in the nature of a bounty or a windfall founded solely on the sweet will of Messrs. Universal Tyres Ltd. The Tribunal was hence clearly right in holding that the amount was in the nature of a casual and nonrecurring receipt not assessable to tax. The decision in Rani Amrit Kunwar's case [1946] 14 ITR 561 (All) is also to the same effect. In this case, the assessee was the sister of the Ruler of an Indian State. Over a long course of years, annual payments were being made to her out of the State exchequer at a fixed rate called " wardrobe allowance " and as presents on certain specified days of festival each year. The question was whether this allowance was a receipt of a casual and non-recurring nature exempt from assessment. The Full Bench answered the question in the negative and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact, recurred, but that there Was 4 claim or a right in the assessee to expect its recurrence. I think mere voluntary payment, not being receipt arising from business or the exercise of a profession, vocation or occupation and not being by way of addition to the remuneration of an employee or not having been made expressly liable, is not liable to be taxed ; and as I understand the exception, a voluntary payment must be deemed to be of a casual and non-recurring nature unless there is a liability on the donor to pay, which liability, may arise out of a contract, a custom or some order which is binding on him. (Emphasis supplied) On the grounds given by me above, I would hold that the allowances made to the assessee from Nabha do not constitute her personal income assessable under the Indian Income-tax Act and that they are of casual and non-recurring nature and are, as such, exempt under section 4(3)(vii) of the Act. " Applying the tests laid down in Rani Amrit Kunwae's case [1946] 14 ITR 561 (All) to the facts of the present case, there can be no manner of doubt that the payment of Rs. 25,000 made to the assessee was a receipt of a casual and non-recurring nature. The payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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