1969-VIL-212-CAL-DT
Equivalent Citation: [1971] 79 ITR 342
CALCUTTA HIGH COURT
Date: 17.03.1969
AMARENDRA NATH CHAKRABORTY
Vs
COMMISSIONER OF INCOME-TAX, WEST BENGAL III.
BENCH
Judge(s) : SANKAR PRASAD MITRA., SABYASACHI MUKHERJEE.
JUDGMENT
SANKAR PRASAD MITRA J.- The assessment year is 1958-59, corresponding to the accounting year 1957-58. The is the eldest son of Sri Sri Thakur Anukul Chandra, the founder of the Satsang movement. The assessee is what is called a ritweek of the Satsang and for his work as a ritweek he receives a salary from the institution. In his capacity as a ritweek he initiates disciples into the Satsang cult and receives offerings from such disciples.
For the assessment year 1958-59, the assessee was assessed for income from salary and for the offerings that he received from his disciples as professional income. The assessee did not object to such assessment. By a deed of gift, however, dated the 6th December, 1957, one Charubala Dasi made a gift of a piece of land to the assessee in the town of Calcutta. In the deed itself this plot of land was valued at Rs. 40,000 for purposes of stamp duty.
The Income-tax Officer held that the acquired the said piece of land by exercising his profession of preaching the religious cult in question to the donor. According to the Income-tax Office the value of the land should, therefore, be taken as the assessee's professional receipt and was taxable as the assessee's income in the accounting year 1957-58. The Income-tax Officer's estimate of the value of the property was Rs. 60,000 and he included this sum in the assessee's total income for the assessment year 1958-59.
The Appellate Assistant Commissioner said that in view of the declared intention of the donor as expressed in the deed of gift, the gift must be held to be related to the profession carried on by the assessee. The Appellate Assistant Commissioner upheld the decision of the Income-tax Officer.
Before the Tribunal the assessee contended that the donor was not his disciple, but was the disciple of his father. The gift, therefore, according to the assessee, was made by the donor to the assessee, who was her guru bhai, out of natural love and affection and was not a receipt in the carrying on of the assessee's vocation as a religious teacher. The Tribunal upon construing the recitals of the deed held that the assessee's receipt of the gift of land was a receipt in carrying on the vocation of a religious teacher and, as such, taxable in his hands. The Tribunal, however, reduced the value of the gift to Rs. 42,500.
In this reference under section 66(1) of the Indian Income-tax Act, 1922, the following question has been referred to this court :
" Whether, on the facts and in the circumstances of the case, and on a proper construction of the deed of gift dated the 6th Dcember, 1957, 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 a religious teacher and was, as such, taxable in his hands? "
Mr. Bikas Sen, learned counsel for the assessee, has argued before us that the admitted fact is that the assessee is a ritweek and in carrying on the vocation of a ritweek he receives salary from the Satsang. The donor, submits Mr. Sen, was not his disciple but the disciple of his father and as such a disciple of the Satsang. The gift that she made, therefore, to the assessee was a gift made out of natural love and affection only to a guru bhai and the eldest son of her spiritual guide. If the assessee, says Mr. Sen, had himself initiated the donor or if the donor had been the assessee's disciple, it could have been held that the offering that the donor made to the assessee was part of the assessee's income. But the facts being otherwise, counsel for the assessee has urged, the tax authorities had erred in adding the value of the land to the assessee's total income for the year in question. This income, states Mr. Sen, was distinct or different from the assessee's professional income which had not been appreciated by the authority below. Reliance was placed on the Supreme Court's judgments in P.Krishna Menon v. Commissioner of Income-tax, Mahesh Anantrai Pattani v. Commissioner of Income-tax, P. H. Divecha v. Commissioner of Income-tax and Parimisetti Seetharamamma v. Commissioner of Income-tax.
We shall discuss these judgments a little later. Let us first consider the provisions of section 4(3)(vii) of the Indian Income-tax Act, 1922. It provides, inter alia, that any receipts, not being receipts arising from business or the exercise of a profession, vocation or occupation, which are of a casual and non-recurring nature or are not by way of addition to the remuneration of an employee, shall not be included in the total income of the person receiving them. In other words, for our purposes in this reference, if the receipt in question is a receipt which arises from the exercise of a profession, vocation or occupation, it does not enjoy the exemption envisaged by section 4(3)(vii).
With these provisions in view, we have to examine the recitals in the deed of gift, dated the 6th December, 1957, which have not been challenged in this reference. Indeed, the Tribunal has considered these recitals to arrive at its finding of facts. The recitals, inter alia, run as follows :
" And, whereas the donee who is the eldest son of the said Sri Sri Thakur Anukul Chandra, is a religious preacher of the said cult enunciated by the said Sri Sri Thakur Anukul Chandra.
And, whereas the donee by the preaching of the said religious cult to the donor for some years past has administered to the mental enlightenment and spiritual benefit of the donor which has brought about a complete change in her outlook of life.
Now this indenture witnesseth that in consideration of the premises and of the affection and veneration which the donor has for her spiritual teacher the donee above named the donor doth hereby grant, convey and transfer by way of absolute gift unto the donee aforesaid all that piece or parcel of land, etc. "
The authorities below have found as a fact that the assessee preaches the cult of the Satsang generally and have particularly found that for several years he had preached that cult to the donor. It has further been found that as a result of this preaching the donor received mental enlightenment and spiritual benefit bringing about a complete change in her outlook of life. The donor makes it clear in the deed of gift that in consideration of these benefits which she had received from the assessee's preaching of the Satsang cult the gift of land was being made. It is clear, therefore, that the gift is strictly traceable to the assessee's vocation of a preacher of the Satsang cult and the value of the gift was undoubtedly a part of the assessee's income as a preacher in the accounting year with which we are concerned in this reference.
It may now be useful to refer to some of the decided cases. In David Mitchell v. Commissioner of Income-tax, the assessee was an accountant by profession and a partner in a firm of chartered accountants. The promoters of a company engaged the services of the assessee's firm to assist them in the floatation of their company. The assessee, as a partner of the firm, attended to this work. The company was floated and the assessee's firm was paid in full for the services that the firm had rendered. Thereafter, one of the promoters " as a token of appreciation for the assistance rendered to him by the assessee in connection with the floatation of the company made an unsolicited gift of 2,500 shares in the company " to the assessee. The Calcutta High Court has held that on the facts of the case the payment was not made in appreciation of the personality or character of the assessee but in appreciation of the professional services rendered by the assessee and in order to give him an extra profit over and above the share of the profit he may get from the firm, and the value of the shares was, therefore, assessable as the assessee's income under section 10 of the Income-tax Act. In this case several English decisions have been considered. For instance, in the case of Cooper v. Blakiston, Lord Loreburn L.C. observed :
" .........where a sum of money is given to an incumbent substantially in respect of his services as incumbent, it accrues to him by reason of his office......Had it been a gift of an exceptional kind, such as a testimonial, or a contribution for a specific purpose as to provide for a holiday or a subscription peculiarly due to the personal qualities of the particular clergyman, it might not have been a voluntary payment for services, but a mere present. "
Again, in Herbert v. McQuade, Sir Richard Henn Collins M.R., as he then was, said :
" ........the test is whether from the standpoint of the person who receives it, it accrues to him in virtue of his office ; if it does, it does not matter whether it was voluntary or whether it was compulsory on the part of the persons who paid it. "
Applying the above principles to the facts in the present reference we find, (a) that the assessee was a preacher of the Satsang cult ; (b) the gift of land may have been made to the assessee voluntarily but it was made in consideration of certain spiritual benefits that the donor had received from the assessee in his capacity as a preacher of the Satsang cult. From these points of view it cannot be urged, in our opinion, that the value of the land was not the assessee's income.
The next case we may refer to is the case of P. Krishna Menon v. Commissioner of Income-tax, decided by the Supreme Court. Here, the assessee was a Government servant. He retired from service and started spending his time in studying and teaching the Vedanta philosophy. L, who was one of his disciples, used to come from England at regular intervals to Trivandrum where the appellant resided. L stayed at Trivandrum for a few months at a time and attended the assessee's discourses, received instructions from him in Vedanta and had the benefit of the assessee's teachings. L transferred a sum amounting to more than Rs. 2 lakhs from L.'s own banking account to another banking account opened in the name of the assessee. Thereafter, from time to time, L put in further sums in the assessee's account. The question was whether the receipts from L constituted the assessee's income taxable under the Travancore Income-tax Act, the relevant provisions whereof were identical with the Indian Income-tax Act, 1922. The Supreme Court had held :
" (i) 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 ;
(ii) 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 because it was carried on without the motive of producing an income ;
(iii) 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 ; it was, therefore, impossible to hold that the payments to the appellant had not been made in consideration of the teaching imparted by him ; and the payments were income arising from the vocation of the appellant ;
(iv) that as the payments made by L were income arising from a vocation they were not casual or non-recurring receipts and no question of exemption under section 4(3)(vii) of the Indian Income-tax Act arose. "
The Supreme Court observed further that in order that a payment may be exempted under section 4(3)(vii) of the Indian Income-tax Act, as a casual and non-recurring receipt, it has to be shown that it did not arise from the exercise of a vocation.
In this reference the Tribunal has correctly relied on this decision of the Supreme Court in P. Krishna Menon, v. Commissioner of Income-tax, for arriving at its conclusions. The assessee's vocation was the vocation of a preacher of the Satsang cult and there is no doubt that in the exercise of that vocation he received the gift of land being the subject-matter of the instant reference.
We would now briefly deal with three other cases which the assessee's counsel had relied on. In Mahesh Anantrai Pattani v. Commissioner of Income-tax, the assessee was the Chief Dewan of the Bhavnagar State from December, 1937, to January 1948, when responsible Government was introduced by the Maharaja and the assessee was given a pension. On March 1, 1948, the Bhavnagar State merged in the United State of Saurashtra and the Maharaja ceased to be the Ruler of that State. On the 31st May, 1950, the Maharaja directed Premchand Roychand & Sons, with whom he had an account, to pay by cheque a sum of Rs. 5 lakhs to the assessee. The assessee received this sum on the 12th June, 1950. On the 27th December, 1950, the Maharaja made the following order :
" In consideration of the ex-Dewan of our Bhavnagar State having rendered loyal and meritorious services Rs. 5 lakhs are given to him as gift. Therefore, it is ordered that the said amount should be debited to our personal expense account. "
When the assessability of this sum of Rs. 5 lakhs for the assessment, year 1951-52 arose, the Maharaja wrote the following letter on March 10, 1953 :
" I confirm that in June, 1950, I gave you a sum of Rs. 5 lakhs which was a gift as a token of my affection and regard for you and your family. This amount was paid to you by Premchand Roychand & Sons according to to my letter of May 31, 1950, from moneys in my account with them. "
The Tribunal relying on the Maharaja's letter of the 27th December, 1950, and treating it as a contemporaneous document, and disregarding the letter dated March 10, 1953, assessed the sum of Rs. 5 lakhs to tax. The Supreme Court has, inter alia, held that the sum of Rs. 5 lakhs was paid to the assessee not in token of appreciation for the services rendered as the Dewan of the Bhavnagar State but as a personal gift for the personal qualities of the assessee and as a token of personal esteem and, as such, the amount was not taxable.
It is to be observed that in this case, the Dewan rendered services to the Bhavnagar State for which he was fully compensated including a pension that was granted to him. Long after his retirement the Maharaja out of his personal account made a gift of Rs. 5 lakhs to him and the documents that were on record did not show that the service rendered to the Bhavnagar State was the causa causans of the making of the gift. In our case, as we have already observed, the gift is directly traceable to the assessee's services to the donee as a religious teacher.
The case of P. H. Divecha v. Commissioner of Income-tax, which the assessee's counsel has cited, does not appear to us to be at all relevant and we need not deal with it.
In Parimisetti Seetharamamma v. Commissioner of Income-tax, the assessee explained that the jewellery and amounts of money which she received in the relevant years were gifts made by the Maharani of Baroda. The Appellate Tribunal relied on (1) assessee's admission that she acted as the local agent of the Maharani for disbursing salaries to the servants of the Maharani, and (2) on a bill issued by a garage in which the assessee was described as the private secretary of the Maharani. The Tribunal observed that the assessee had failed to place before the income-tax authorities all the evidence in support of her contention that the gifts from the Maharani did not constitute her income and held that these gifts were remuneration for services rendered or to be rendered. The Supreme Court was of opinion, (1) that the Tribunal had wrongly placed the burden of proof on the assessee, and (2) the circumstances that the Tribunal relied on did not establish that what the Maharani gave to the assessee was remuneration for services rendered or to be rendered. The Supreme Court said that these gifts were not assessable to tax. In stating the law on the subject, the Supreme Court states that where the case of the assessee is that a receipt did not fall within the taxing provision, the source of the receipt is disclosed by the assessee and there is no dispute about the truth of that disclosure, the income-tax authorities are not entitled to raise an inference that the receipt is assessable to income-tax on the ground that the assessee has failed to lead all the evidence in support of his contention that it is not within the taxing provision.
It seems to us that Parimisetti's case is of no assistance to the assesee in this reference. There the Supreme Court was dealing with the burden of proof after the assessee had made a disclosure of the sources of the assessee's income. In the instant case no such question is arising. Here there is a document, namely, the deed of gift executed on the 6th December, 1957, and both parties relied on this deed for their respective contentions. Upon construction of the relevant terms of the deed in the context of facts found by the authorities below, we have come to the conclusion that the value of the land being the subject-matter of the gift is a taxable income in the hands of the assessee.
In the premises, the answer to the question referred to us is in the affirmative. The assessee will pay to the Commissioner the costs of this reference.
SABYASACHI MUKHARJI J.- I agree.
Question answered in the affirmative.
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