9911796707
TMI Blog1984 (7) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... hitties Act received by the assessee is income in its hands, liable to be taxed under the I.T. Act, 1961, for short "the Act". Facts are few and identical for all these years. They are given hereunder : In the profit and loss statements for these years, the assessee had claimed deduction of certain amounts representing " veethapalisa " which, according to it, is not income liable to be taxed. It is an item of income which is exempt from tax. The assessing authority rejected this contention of the assessee and treated " veethapalisa " as taxable income while computing the assessable income of the petitioner. Aggrieved by the orders of assessments, the assessee filed appeals before the AAC, Ernakulam, and reiterated before him the same contention that " veethapalisa " received by it during the respective years was not taxable income. So far as the years of assessment 1973-74, 1974-75 and 1975-76 are concerned, the assessee had raised an additional ground, namely, that it was not the assessee, but another firm by name M/s. M. George and Brothers which was the subscriber to the chitties and, hence, the " veethapalisa " in question must be held to be earned by that firm and as such tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of the assessee for the respective assessment years ? " It is in regard to the second question which the Tribunal refused to refer to this court, the assessee has moved Original Petitions Nos. 3894, 3895, 3896 and 3897 of 1979 under s. 256(2) of the Act for an order compelling the Tribunal to refer the said question also to us for our opinion. These original petitions will be dealt with and disposed of separately. Before we consider the argument of the counsel for the assessee that " veethapalisa " received by the assessee is not income in its hands liable to be taxed, we will briefly state the law that is applicable to the case. The complexity involved in modern trade, commerce and finance has made it next to impossibility to define the word " income " precisely. Even the legislature has not defined " income " with precision. Instead, it has used the word " includes " in the interpretation clause, s. 2(24) of the Act (corresponding to s. 4(3)(vii) of the 1922 Act), while defining the word " income " to indicate that the narrow or restricted meaning given to the word in Shaw Wallace's case, AIR 1932 PC 138 ; [1932] 2 Comp Cas 276 (PC), by Sir George Lowndes, shall not contro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Chettiar v. CIT [1967] 63 ITR 458, lends support to this view. The Supreme Court has held thus (p. 464): " It was also contended that the receipt of interest was casual in its character. The expression 'casual' has not been defined in the Act and must, therefore, be construed in its plain and ordinary sense. According to the Shorter Oxford English Dictionary, the word 'casual' is defined to mean : '(i) subject to or produced by chance; accidental, fortuitous, (ii) coming at uncertain times; not to be calculated on, unsettled.' receipt of interest which is foreseen and anticipated cannot be regarded as casual even if it is not likely to recur again. " This decision has also upheld the contra, viz., that a receipt "which is foreseen and anticipated cannot be regarded as casual even if it is not likely to recur again." This court while considering the scope of s. 10(3) of the I.T. Act, 1961, has held in K. Sankaran v. CIT [1978] 115 ITR 561 (Ker) thus (p. 570): " From the section it will be seen that unless the receipt satisfies the dual test of being of a casual and of a non-recurring nature, it will not qualify for exemption from taxation." It has further been held that even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in this regard has held thus : " In other words, by the very terms and nature of the business and the agreement, the foreman has so arranged matters that he can become subscriber in the chit at his option and that he can get the prize amount without discount but at the same time he is entitled to the 'veethapalisa'. In other words, the scheme of profit making is built into the scheme of the chit and since the chit is a business proposition for him, we are unable to regard the receipts by the foreman by way of 'veethapalisa' as other than in the nature of business receipts ......... It is only the foreman who invariably makes a surplus out of the entire transaction.. In respect of every chit to which he is a subscriber, the foreman definitely stands to gain. This is a direct result of the provisions of the chit fund and it is the direct result of a scheme of profit making and an integral part of the business carried on by the foreman." These findings are not under challenge. The assessee, therefore, cannot contend that the " veethapalisa " is not income in its hands, attracting tax. The right to claim " veethapalisa " is vested in every subscriber in terms of the variola as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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