ORDER
V.K. Gupta, A.M.
1. This appeal is filed by the assessee and directed against the order of CIT(A)-XVII, Mumbai dt. 8th Dec., 2004 for asst. yr. 2001-02.
2. We have heard both the sides and have also perused the materials placed on record and applicable legal position.
3. In this appeal, the assessee is aggrieved by the decision of learned CIT(A) in confirming the gifts of Rs. 1,22,70,795 received by the assessee on his 80th birthday as his income from business and profession.
4. Ground No. 2 is argumentative in nature in support of ground No. 1, hence, no specific decision thereon would be given as the same would be dealt with ground No. 1.
5. The facts, in brief, are that the assessee is an individual who filed return of income showing income from other sources. As borne out from the assessment order, it is noted that assessee is a well known social reformer and philosopher and lacs of followers are spread all over the world. The AO from the note enclosed with the computation of income chart (found) that assessee had received voluntary gifts of Rs. 1,22,70,795 on his 80th birthday from his admirers and well wishers in recognition of his personal qualities and noble thoughts. The said amount had been claimed as exempt. The AO after taking cognizance of the decision of Hon’ble Allahabad High Court in the case of Addl. CIT v. Ram Kripal Tripathi held that conducting spiritual discourses amounted to a vocation. The assessee replied that the impugned sums had been received at his birthday function and these payments were not paid to him in the course of practice of any profession or vocation, hence, the same did not represent any income. The assessee also relied on the decision of Hon’ble Bombay High Court in the case of Dilip Kumar Roy v. CIT and also on the decision of Hon’ble Supreme Court in the case of Mahesh Anantrai Pattani v. CIT . The AO, however, held that the facts of this case were different from the case of Dilip Kumar Roy (supra) hence there was not much substance in the contentions of the assessee. Thereafter, the AO held that the Hon’ble High Court in the case of Ram Kripal Tripathi (supra), the decision had got strong support from the decision of Hon’ble Supreme Court in the case of P. Krishna Menon v. CIT wherein it was held that the teaching of Vedanta was in the nature of carrying of vocation and in that process purchase of car by his disciples for him could be treated as value of any benefit or perquisite whether convertible into money or not arising from business or profession under Clause 28(iv) of the Act. The AO, thereafter, held that the facts of this case were comparable to the case of Ram Kripal Tripathi (supra) as well as that of case of P. Krishna Menon (supra), hence, the provisions of Section 28(iv) of the Act were squarely applicable. Accordingly, he treated the gifts received by the assessee as his income from profession.
6. Aggrieved by this, the assessee carried the matter in appeal before the learned CIT(A) wherein the assessee pointed out that the assessee was working tirelessly and restlessly over 50 years for the upliftment of the masses both on economic as well as spiritual front. It was also submitted that the occasion of his 80th birthday, several disciples proposed to make gift on this auspicious occasion and these gifts were received at different centres at different dates. It was also brought to the notice of the learned CIT(A) that prior to this in asst. yr. 1975-76 similar gifts were received and which were held as exempt by the Department in the hands of the assessee. The learned CIT(A), however, confirmed the decision of the AO agreeing with his findings. Aggrieved by this, the assessee has carried the matter before us.
7. The learned Counsel for the assessee narrated the facts of the case and, thereafter, he described the personality of the assessee and the work done by him by spreading the ideology of Swadhyaya for the upliftment of masses. It was also contended that assessee’s philosophy and work had been applauded at various international forums at various points of time. Thereafter he gave brief account the various awards by him by his contribution for his efforts included G.D. Birla International Award for Humanism for Community Leadership and Padma Vibhushan title given by the Government of India. The learned Counsel referred to paras 31 to 63 of the paper book to support the above contentions. Thereafter the learned Counsel contended that it was a movement and not a vocation, hence, consideration of the same as vocation was not a proper tribute to such person rather it was a discredit to him. The learned Counsel also contended that on earlier occasion only once in the life of the assessee such gifts were received and which were accepted by the Department, hence, it was not a case where the assessee was engaged in vocation and was receiving fees from disciples or followers in the form of gifts in a regular manner. The learned Counsel also referred to the composition of income in various years to show the nature thereof and also referred to the assessment order passed under Section 143(3) of the Act for asst. yr. 1975-76 wherein the persons who had gifted at that time had stated that the present given to him had nothing to do with discourses or lectures they attended and they presented gifts to him due to the personal qualities of the assessee whom they held in high esteem and regard. Thereafter, the learned Counsel contended that he could also rely on the decision of P. Krishna Menon’s case (supra) strongly relied upon by the Revenue authorities and referred to the observations of Justice Rowlatt in the case of Reed v. Seymour (1926) 1 KB 588 reproduced by Hon’ble Supreme Court wherein it was held that when amount received was in the nature of personal gift, then, it was not taxable and when it was in the nature of remuneration, then, it was taxable. Thus, according to the learned Counsel, every receipt in such circumstances was not to be treated as income rather there was a presumption of personal gift in such cases. The learned Counsel, thereafter, referred to the decision of the Hon’ble Supreme Court in the case of Parimisetti Seetharamamma v. CIT to contend that in all cases in which the receipt was sought to be taxed as income, then, the burden lied upon the Department to prove that it was within the taxing provisions and where, however, a receipt was of the nature of income, the burden of proving that it was not taxable because it fell within an exemption provided by the Act, lied upon the assessee. The learned Counsel contended that in the present case, gifts received by the assessee on earlier occasion had been accepted by the Department, hence, it was incumbent upon the Department to prove the difference of fact between both these occasions and also to investigate further to prove the real nature of these receipts. The learned Counsel also placed reliance on the decision of Hon’ble Madras High Court in the case of CIT v. S.A. Rajamanickam in support of his contention that the onus was upon the Revenue to prove that the amount constituted as income and failing which the amount was not taxable as income from profession. The learned Counsel also placed reliance on the decision of Hon’ble Madras High Court in the case of S.A. Ramakrishnan v. CIT wherein it was held that cash gifts presented on the occasion of birthday could not be treated as income in the absence of any material to establish the fact that such presentations were in the nature of remuneration for past performance and in the present case no such facts were brought on record; hence, for this reason also the impugned sums could not be treated as income of the assessee. The learned Counsel, thereafter, contended that in the case of P. Krishna Menon (supra) the assessee, after retirement from Government services, engaged himself in teaching of Vedanta philosophy whereas in the present case the assessee established this movement as a cause of his life and devoted himself to that cause, hence, this vital fact was different in the case of the assessee from that case, hence, the ratio of that decision could not be applied to the present case.
8. The learned Departmental Representative, on the other hand, placed strong reliance on the order of learned CIT(A).
9. We have considered the submissions made by both sides, material on record and orders of authorities below. It is noted that the assessee is a social reformer who established a movement called ‘Swadhyaya’ for the upliftment of masses which was joined by great number of followers. It is also noted that the assessee has devoted his whole life to the cause of this movement. It is also noted that assessee has never charged any fee or remuneration from his followers or the persons who attended his lectures at any point of time. In this background, we find sufficient force in the contention of the assessee that it was movement or campaign and not a vocation. Having stated so, however, even if it is treated as vocation then, having regard to the fact that assessee never charged any fee or remuneration for his imparting of knowledge and practicing of values based on “Shrimad Bhagawat Gita” and also the fact that the assessee did not have any vested right to receive any kind of payment for these activities from his disciples/followers, hence, the gift made by the followers, without being under any contractual or legal or customary obligations, cannot be treated as a consideration arising out of carrying of vocation. We would further like to add that as far as provisions of IT Act is concerned every receipt is not income though the term ‘income’ has been defined in an inclusive manner, hence, such receipt must necessarily fall under the specific charging provisions. The Revenue authorities have applied the provisions of Section 28(iv) of the Act wherein it is provided that any benefit or perquisite arising out of exercise of business or profession would be treated as income. These two words have been used in this provision, i.e. ‘benefit’ or ‘perquisite’ and other condition is that such benefit or perquisite should arise out of exercise of business or profession. In the facts of the case, the Revenue has not established conclusively that the amount of gift arose to the assessee as a consequence of exercise of vocation because such gifts have got no element of consideration being paid for services obtained by the followers/disciples. It is also noted that both the words ‘benefit’ and ‘perquisite’ refer to specific situations wherein, generally receipt of revenue nature having attributes of income would be covered and such attribute should exist from very beginning. To illustrate this aspect, we state that where a gift is made in lieu of paying consideration for services obtained and this fact is established, then, such amount of gift can fall within the provisions of Section 28(iv) of the Act. We would also like to add that these two words used in this section would arrive colour from each other and in this regard we deem it fit to reproduce the findings of the order of the Tribunal in the case of Helios Food Improvers (P) Ltd. v. Dy. CIT (2007) 14 SOT 546 (Mumbai) wherein provisions of Section 28(iv) have been explained as under:
Now the question for consideration arose as to whether the receipt in question could be said to have arisen from the business of the assessee as contemplated under Section 28(iv). Sec. 28 is a charging section for profits and gains of business or profession and it takes into account the receipts of specified categories as of income as well as the receipts which can be generally construed as income in the ordinary sense. But the fact remains that all the receipts mentioned in Section 28 are inherently of income nature except in case of receipt under a Key Man Insurance Policy which is a recovery of expenditure already allowed as deduction. Hence, prima facie the loan received by an assessee in the course of business is not envisaged as income. Now, coming to specific provisions of Sub-section (iv) of Section 28 it is also in connection with the value of any benefit or perquisite arising from business, which means that such benefit or perquisite should be in the nature of income from the very beginning or it must have characteristics of income before it becomes chargeable at a later stage, if the original transaction is completed as designed. No material had been brought on record to show that the loan agreement provided for such waiver at subsequent stages. Hence, this receipt could not be construed as a benefit within the meaning of Section 28(iv). Further, the words ‘benefit’ or ‘perquisite’ have been used in this sub-section, which have to be read together and would draw colour from each other. Normally, the term ‘perquisite’ denotes meeting out of an obligation of one person by another person either directly or indirectly or provision of some facility or amenity by one person to another person and from the very beginning, the person providing such facilities or concessions knows that whatever is being done is irretrievable to him as it has been granted to a person as a privilege or right of that person. Therefore, the word ‘benefit’ has also to be interpreted in the same manner, i.e., at the time of execution of the business transaction, the one party should give to the other party some irretrievable benefit or advantage. In the instant case, the assessee had no such special right or privilege. The only privilege which it enjoyed was regarding no liability to pay any interest as the funds were interest-free. Hence, the assessee derived benefit to this extent only and had it been a case of interest being payable by the assessee originally which was waived subsequently, in part or toto, the same would have been a benefit under Section 28(iv) surely. Further, the provisions of Section 28(iv) can be applied in a number of situations but the bottom-line or crucial fact would always be circumvention of income by taking or receiving income in other forms. Therefore, the loan amount waived by the lender was not chargeable to tax as the income of the assessee.
10. From the perusal of above, it is clear that in the present case there is no intention of circumvention of income on the part of assessee or receiving income in other forms, hence, provisions of Section 28(iv) of the Act cannot be applied. We would further like to add that the term ‘perquisite’ as per Black’s Law Dictionary means “privilege or benefit given in addition to one’s salary or regular wages” which means that it is an additional benefit and not a complete substitution of one’s income. As stated earlier that assessee has never charged any consideration from his followers, hence, on the basis of above meaning it cannot be termed as ‘benefit’ or ‘perquisite’ within the meaning of Section 28(iv) of the Act. There is one more reason which we would like to specifically mention i.e., that the assessee has taken gift earlier only once and that too some 25 years back and at that time, the Department has not charged the same to tax in completing the assessment proceedings under Section 143(3) of the Act and during those assessment proceedings, the then followers who made the gifts clearly stated that those gifts had been given out of personal regard and respect to the qualities of the assessee. In this year also, the same is the position and the Revenue has not brought on record any material to prove otherwise. Thus, in view of above discussion, we hold that these gifts are not of the nature of any benefit or perquisite as contemplated under Section 28(iv) of the Act. Accordingly, we delete the addition made by the AO.
11. In the result, appeal filed by the assessee stands allowed.