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TMI Blog1986 (3) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... ru Anukul Chandra Thakur. These two assessees are mother and son. Smt. Sarbamangala Devi is an employee of satsang and gets salaries therefrom and she looks after the female section of the organisation in consideration of which she is being paid salaries by her employer. This will be evident from the assessment orders of Smt. Sarbamangala Devi. In the assessment years 1963-64, 1964-65, 1965-66 and 1966-67 the assessee, Smt. Sarbamangala Devi, filed returns in pursuance of the notice served under section 148 of the Act. The assessee received the following amounts as pranamis : Assessment year 1963-64 ... Rs. 8,440 Assessment year 1964-65 ... Rs. 9,327 Assessment year 1965-66 ... Rs. 8,648 Assessment year 1966-67 ... Rs. 10,265 Dr. P. R. Chakravarty is also an employee of the satsang and gets his salaries therefrom. He is a qualified doctor and looks after the hospital of the satsang, as will be evident from paragraph 3 at page 44 of the paper book. He also received the following amounts as pranamis : Assessment year 1963-64 ... Rs. 6,200 Assessment year 1964-65 ... Rs. 4,654 Assessment year 1965-66 ... Rs. 4,325 Assessment year 1966-67 ... Rs. 6,442 As stated abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntenance of the Guru family. 4. The disciples and followers of satsang constitute a definite source of income and the receipts of pranamis recur from year to year." In view of the aforesaid reasons, the Income-tax Officer included in the income of the assessees the various pranami amounts as mentioned above in the assessment relating to both the assessees. The assessment orders of the Income-tax Officer relating to Smt. Sarbamangala Devi for the assessment years 1963-64 to 1966-67 have been annexed and marked as annexures A-1 to A-4 forming part of the statement of the case. The assessment orders relating to Dr. P. R. Chakravarty for the assessment years 1963-64 to 1966-67 have been annexed and marked as annexures B-1 to B-3 forming part of the statement of the case. The assessees appealed before the Appellate Assistant Commissioner for all the four assessment years. The Appellate Assistant Commissioner passed two separate orders on February 17, 1975; one relating to Smt. Sarbamangala Devi and the other relating to Dr. P. R. Chakravarty. In the case of Smt. Sarbamangala Devi, the Appellate Assistant Commissioner, following the order of the Tribunal in Income-tax Appeal Nos. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d there was nobody else who had the right to preach the satsang cult and receive any amount as consideration for preaching from the disciples or others. It was also pointed out by the Tribunal that the salary had been offered by the assessees for taxation and subjected to tax and that the dispute does not centre round it but the dispute centres round the offerings received as a matter of gratitude and that such offerings are spontaneous and they have no pre-thought about it. It has also been observed that voluntary offer may have pre-thinking about it but the spontaneous offering has no element of physical thinking or physical activity and whatever is done spontaneously by an individual without a pre-thought, without pre-design, without a purpose, without a motive and without consideration, cannot be taken as exchange of money which may be taken as carrying on of a vocation (sic). The Tribunal also found that there was a complete element of spontaneity in what was offered and there is no element of regularity of these spontaneous offerings because the offerings are not by the same person from time to time. It was also held that there being no regularity about it, there being no cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to as "the old Act"). It was also held by their Lordships of the Supreme Court that teaching was a vocation, if not a profession, and teaching vedanta was just as much teaching as any other teaching and, therefore, a vocation. It was also held by their Lordships of the Supreme Court that in order that an activity might be called a vocation, it was not necessary to show that it was an organised activity and that it was indulged in with a motive of making profit; it was well established that it was not the motive of a person doing an act which decided whether the act done by him was the carrying on of a business, profession or vocation ; and if any business, profession or vocation in fact produced an income, that was taxable income, and was none the less so even though it was carried on without the motive of producing an income. It was also held by their Lordships of the Supreme Court that the teaching of vedanta by the appellant was the carrying on of a vocation by him and that the imparting of the teaching was the causa causans of the making of the gifts by L, that it was impossible to hold that the payments to the appellant had not been made in consideration of the teaching im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a piece of land valued at Rs. 40,000 to the assessee in the town of Calcutta. It was found as a fact that the assessee preached the cult of the satsang generally and that for several years he had preached that cult to the donor. It was further found that as a result of this preaching, the donor received mental enlightenment and spiritual benefit bringing about complete change in her outlook on life. The donor stated in the deed of gift that in consideration of those benefits which she had received from the assessee's preaching of the satsang cult, the gift of land was being made. In this connection, it was held by the Calcutta High Court that the gift was strictly traceable to the assessee's vocation as a preacher of the satsang cult and the Tribunal was right in holding that the sum of Rs. 42,500 being the value of the gift of land was a receipt by the assessee in the carrying on of the assessee's vocation as religious teacher and was, as such, taxable in his hands. In the present case before us, the assessees are not preaching to the disciples of satsang and so this decision will not be applicable to the case of the assessee in the present case before us. Mr. B. P. Rajgarhia has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alsia State and Rs. 8,910 from the Nabha State. It was found that similar payments had been made to the assessee of varying amounts in all the years she had lived at Dehra Dun and that they represented allocations for her benefit made in the relative State budgets. In the case of payments from the Kalsia State, they were made for the purpose of meeting the assessee's household and living expenses and the education of her children and in the case of the allowance from Nabha State, it was made as an annual "wardrobe allowance" and as presents on certain days of festivals each year. She was not bound to account for the moneys although the payments appeared in the State budgets as State expenditure. There was no dividing line between the part of the income of the State which the Ruler spent for public purposes and that part which he spent for his private purposes, and in those circumstances it was held that the allowances received by the assessee from the Kalsia State were remittances from her husband and were taxable as income which must be deemed to have accrued to the assessee in British India under section 4 (2) of the old Act, and the question whether the remittances received by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house, His Highness would be entitled to 1/3rd of the sale price minus the share of the Government of India in the form of 75% of the incremental value. The fact that the payment to the Raja was only an ex gratia payment was emphasised by the Government in subsequent correspondence also. 1/3rd of the rent was continued to be paid to His Highness Maharaja Udai Bhan Singhji till his death and, thereafter, to Her Highness Malvindar Kaur, and then, to His Highness Maharaja Hemant Singhji, who was recognised as the ruler of the Dholpur State. These payments ceased when the said property was sold out. For the assessment years 1953-54, 1954-55, 1955-56, 1956-57, 1958-59, 1960-61, 1961-62 and 1962-63, the income from this property was taxed under section 9 of the old Act, and for the assessment years 1957-58 and 1959-60, the income from this property was taxed under section 12 of the old Act by the Income-tax Officer. In the appeals by the assessee, the Appellate Assistant Commissioner took the view that the payments received by the assessee were casual receipts and were exempt from taxation under section 4(3)(vii) of the old Act. The Tribunal reversed the order of the Appellate Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs to her credit and was a mere housewife. Even when she allowed water to be taken from her well she had no intention of charging for the water. In those circumstances, the Madras High Court held that the receipt cannot be treated as a business profit and that a fact of the utmost importance in this case was that the assessee was a married woman who was intent upon building a family residence and running her family in it and who had no thought of running business of any kind on her own, and so it was held that the receipt was casual and non-recurring receipt and hence not taxable. It has been held in the case of Sewal Singh Ajit Singh v. CIT [1980] 126 ITR 732, which is a decision of the Punjab and Haryana High Court, that the Nawab of Malerkotla transferred to the assessee a piece of land valued at Rs. 16,000. The Income-tax Officer fixed the value of the land at Rs. 20,000 and treated the same as the assessee's income on the ground that the land had been conveyed by the Nawab in token of service rendered by the assessee in his capacity as a general attorney for the purpose of selling the lands belonging to the Nawab. In those circumstances, it was held by the Punjab and Haryana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the gift received by him was towards the services rendered, and so it was held that the value of the lands gifted could not be included in the total income of the assessee as his professional income. It has been held in the case of Rev. Father Prior, Sacred Heart's Monastery v. ITO [1956] 30 ITR 451 (TC) that the donations received by a monastery for putting up a charitable institution and used for that purpose cannot be regarded as income and assessed to income-tax; they are of the nature of gifts and are capital receipts. It has also been held in this decision that assuming that such donations are of the nature of "income" and not capital receipts, they fall within section 5(3)(vii) of the Cochin Income-tax Act which exempts receipts, which are of a casual and non-recurring nature from the liability to assessment. It has also been held in this decision that the mere fact that certain donations have recurred in some years is not sufficient to characterise them as "recurring receipts." In order that a receipt may be a "recurring receipt", there must be a claim or right in the assessee to expect its recurrence, and that voluntary gift depending entirely upon the goodwill of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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