ORDER
M.A. Ajinkya, Accountant Member
1. This is an appeal by the assessee for the assessment year 1982-83 in which several grounds are agitated. They are dealt with seriatim.
2. The first ground is that the learned Commissioner of Income-tax (Appeals) erred in holding that the central excise refund of Rs. 70,649 is taxable under Section 28(iv). The appellant is a firm. Its accounting year is Samvat year 2037, i.e., the period from November 8, 1980, to October 27, 1981. The firm was constituted under a deed of partnership dated January 17, 1980, and it came into operation form January 3, 1980. Earlier, it was a proprietary concern of one Hiralal Padamshi who died on January 2, 1980. As per the will of the deceased, his proprietary business was converted into a partnership firm consisting of five partners. The firm received central excise refund of Rs. 70,649 in respect of exports effected in Samvat years 2035 and 2036. This refund was brought to tax in the hands of the partnership under Section 28(iv). The appellant, before the Commissioner of Income-tax (Appeals), relied on a decision of the Bombay High Court in Arvind Bhogilal’s case [1976] 105 ITR 764, and another decision of the Bombay High Court in P.L. Paruck’s case [1978] 113 ITR 869 to argue that this income was due to the deceased. It was received after his death and could not be taxed in the hands of the legal representative. The Commissioner of Income-tax (Appeals), after considering the various decisions cited, held in paragraph 3 of his order that the duty drawback was due not to the individual but to the concern in lieu of the exports made. He also noticed that the amount was received in the trade
name of the concern and not in the name of the legal heirs of the deceased. No legal formalities were insisted upon by the authorities to establish that the recipient of the duty drawback was the legal heir of the deceased. The duty drawback had been paid in the name of Padamshi Meghji which was the trade name of the proprietary concern as well as of the partnership. On these facts, we are satisfied that the order of the Commissioner of Income-tax (Appeals) is correct and has to be confirmed. We are supported in this view by a decision of the Calcutta High Court in Kesoram Industries and Cotton Mills Ltd.’s case [1978] 115 ITR 143, where the court held that the amount received under an export incentive scheme is an amount received in the course of carrying on of the business and is, therefore, taxable income. In the present case, the business carried on by Padamshi Meghji was continued by the firm. The excise refund was received not by any individual but by the business name and it was received by the firm not in its capacity as heir or legal representative of the deceased but as an entity which was carrying on the same business. It has, therefore, in our opinon, been rightly taxed in the hands of the firm. This ground is, therefore, rejected. For the same reasons, we would reject grounds Nos. 5, 6, 7 and 8 in which the assessee is objecting to the Commissioner of Income-tax (Appeals)’ decision confirming the addition of Rs. 6,41,168 as excise duty drawback, Rs. 82,402 as customs duty drawback, Rs. 2,36,568 as Handloom Export Council incentives and Rs. 2,83,627 as cash incentives from the Indian Cotton Mills’ Federation. We are supported in this finding by a decision of the Special Bench of the Tribunal reported in 25 ITD 193, apart from the decision of the Calcutta High Court referred to hereinabove.
3. The only other ground in this appeal is that the learned Commissioner of Income-tax (Appeals) erred in not allowing weighted deduction on expenditure of Rs. 91,012 on the ground that none of the items of expenditure falls under any of the sub-clauses of Section 35B(1)(b). The details of such expenses have been given in paragraph 10 of the Income-tax Officer’s order. The appellant’s representative pressed the claim for brokerage on export sales amounting to Rs. 53,134, which, according to the assessee, fell in Clause (iv) of Section 35B(1). In support of its claim, the assessee has filed a copy of the order of the A-Bench of the Tribunal for the assessment years 1977-78 to 1980-81 in the case of the executors of the late Shri Hiralal Padamshi. After going through the papers filed, we are satisfied that weighted deduction under Section 35B(1)(b)(iv) on item 10 of the expenditure, namely, brokerage on export sales, should be allowed.
4. In the result, the appeal will be allowed in part.
5. S. P. KAPUR (Judicial Member).–Having gone through the proposed order of my learned brother, the Accountant Member, and being not able to persuade myself to the reasoning and conclusions arrived at by my learned brother in the proposed order, vis-a-vis, grounds Nos. 1, 2 and 3 above, I am appending to his order the following note of dissent.
6. Facts put in the correct perspective are that the present assessee which is a registered firm by status came into existence on January 2, 1980. Prior to that, the business was being carried on under the same name and style, viz., Padamshi Meghji, Bombay, but as a proprietary business-concern–by one Hiralal Padamshi who died on January 2, 1980. The said Hiralal Padamshi had willed his properties and a copy of the said will has been placed on the file of the Income-tax Appellate Tribunal as page 1 of the assessee’s paper book. It reads as under :–
“True
copy Established
1931
Padamshi Meghji Exporters of :
All types of cotton textiles
Manufacturers of:
Waterproof cotton canvas, tarpaulins, jute canvas,
holdalls, tents, kitbags, jute mail bags, etc.
Mail address office:
Post Box No. 3046, Bombay-400 003, India. 101, J. M.
Chambers, First floor, 316, Narsi Natha Street, Bombay-400 009, India.
Bankers:
Union Bank of India, Bhat Bazaar, Bombay-400 009, India.
Tel. Off.:
323921, 332390. Res : 473853 Cable Address :
“SAGARDEV” Bombay-400 009 Telex : DUCKING Oil 5320.
Will
Our Ref. No. :
Date : 1st November, 1979.
7. I, Hiralal Padamshi Kothari, residing in Chembur, Bombay, do hereby make this will as my last will and testament.
(1) I make this will with full knowledge and appreciation of the facts and have full control of my senses and I am making this will voluntarily without being under any pressure from any quarters or from anybody.
(2) I appoint Shri Madhukant, my son, and Smt. Ratanbai, my wife, as executors and trustees of this will, who shall distribute the properties as under :
(3) I am making this will for the properties of which I am the absolute owner, which consist of my share of interest in residential property at Chembur, Bombay, and my business assets of Messrs. Padamshi Meghji.
(4) My share of interest in the house property at 13, Shivam, A.S. Road, Chembur, Bombay, to be given to my wife–Smt. Ratanbai. Pay Rs. 5,000 each to each of my four grandchildren–Rupali, Ashish, Sejal and Meghna. Also pay Rs. 5,000 each to each of my four daughters-in-law–Anjana, Kusum, Krishna and Harshila.
(5) Divide the remaining estate into 6 (six) equal parts and hand over 2 (two) parts to Hindu undivided family of Smt. Ratanbai, my wife, and four sons–Madhukant, Kulin, Rajesh and Ashwin, i.e., bigger Hindu undivided family and one part each to each of the Hindu undivided family of my four sons–Madhukant, Kulin, Rajesh and Ashwin, who shall hold the same as kartas of their respective Hindu undivided families.
After my death, I wish and hope you all live in peace and together. God bless you all.
(Sd.) Hiralal Padamshi
WITNESSES :
1. M. V. Kothari
32, Vardhman, 135-A, A. K. Marg,
Bombay-400 036.
2. Mira Dharamsey,
16, Chandra Villa, Shiveri Wadala Road No. 1,
Matunga, Bombay-400 019.”
8. The legatees–beneficiaries–under the above will decided to carry on the business in the same name and style as was being carried on by the late Hiralal Padamshi and for that purpose they–legatees/beneficiaries under the will agreed to form a partnership and a partnership deed was executed at Bombay on January 17, 1980. The relevant portion of the said partnership deed reads as under (copy of this partnership deed has been
placed on the file of the Income-tax Appellate Tribunal as pages 2 to 6 of the paper’ book) :–
“PARTNERSHIP DEED
This deed of partnership executed at Bombay on this 17th day of January, 1980, between (1) Shri Madhukant Hiralal as karta of Hiralal Padamshi, Hindu undivided family, hereinafter referred to as the party of the first part, (2) Shri Madhukant Hiralal as karta of Madhukant Hiralal, Hindu undivided family, hereinafter referred to as the party of the second part, (3) Shri Kulinkant Hiralal as karta of Kulinkant Hiralal, Hindu undivided family, hereinafter referred to as the party of the third part, (4) Shri Rajesh Hiralal as karta of Rajesh Hiralal, Hindu undivided family, hereinafter referred to as the party of the fourth part, and (5) Shri Ashwin Hiralal as ,karta of Ashwin Hiralal, Hindu undivided family, hereinafter referred to as the party of the fifth part.
WHEREAS one Shri Hiralal Padamshi was carrying on business as the proprietor under the name and style of ‘Messrs. Padamshi Meghji’, at 101, J. M. Chambers, 316, Narsi Natha Street, Bombay-400 009, till his demise in exports of and local trading in, cotton textiles and other articles.
AND WHEREAS the said Hiralal Padamshi died on January 2, 1980, leaving behind him a will dated November 1, 1979.
AND WHEREAS as per the provisions of the said will, the said deceased Hiralal Padamshi had bequeathed the said entire business on the parties hereto, to be held by them as a bequeath made to them equally in the Hindu undivided family capacity on behalf of the Hindu undivided family.
AND WHEREAS the parties hereto are jointly and equally entitled to, as per the provisions of the said will, the assets and liabilities of the said entire business carried on by the said deceased Hiralal Padamshi.
AND WHEREAS the parties hereto having decided to carry on the said business succeeded by them jointly in partnership under certain terms and conditions.
AND WHEREAS the parties are desirous of recording the said terms and conditions in writing.
NOW THIS DEED OF INDENTURE WITNESSETH AS FOLLOWS :
1. That the business of the partnership has commenced from January 3, 1980.
2. The business of partnership shall be carried on, under the name and style of Messrs. Padamshi Meghji or such other name or names as the partners may agree upon from time to time.
3. That the business of the partnership shall be carried on at 101, J. M. Chambers, 1st Floor, 316, Narsi Natha Street, Bombay-400 009, or at such other place or places as the partners may from time to time agree upon.
4. That the business of the partnership shall be that of wholesalers, exporters, importers and commission agents of any and all products in general and of textiles, yarn, cotton and yarn wastes, cotton, cotton and oil seeds, cotton canvas, tarpaulins, jute canvas, dyes, chemicals and any other business incidental thereto, in particular and such other allied business and the partnership firm may carry on any other business as may be agreed upon by all the partners from time to time.
5. That the parties hereto shall be entitled to or bear the net profits or losses, as the case may be, arising from the same partnership business in the following shares, namely :–
Profits
Losses
1.
Hiralal
Padamshi, Hindu undivided family
20%
Nil
2.
Madhukant
Hiralal, Hindu undivided family
20%
25%
3.
Kulinkant
Hiralal, Hindu undivided family
20%
25%
4.
Rajesh
Hiralal, Hindu undivided family
20%
25%
5.
Ashwin
Hiralal, Hindu undivided family
20%
25%
Total
100%
100%”
(Terms 6 to 17 of the partnership deed being not relevant for the purpose of this appeal, they have been omitted)
9. For the period and relating to the business when late Hiralal Padamshi was the sole proprietor, Rs. 70,649 were received representing central excise refund on exports effected, to emphasise, when late Hiralal Padamshi was carrying on the business as a sole proprietor and for that period. Since the legatees/beneficiaries under the will thought it fit to carry on the business in partnership under the same name and style as late Hiralal Padamshi was carrying on, the present assessee-a partnership firm-got
that refund of Rs. 70,649 encashed and the entry was made in the books of account maintained by the partnership firm in the accounting period relevant to the assessment year under appeal.
10. Now, the issue before the Income-tax Appellate Tribunal is, as to whether the said amount of Rs. 70,649 could be taken as income of the present assessee-appellant, the partnership firm.
11. The assessee has, under a misconceived notion, included the income in his return for this assessment year but this is of no effect since there is no estoppel and the assessee having itself challenged the inclusion of that income, it has to be taken that it has resiled from the position which it had taken wrongly while filing the return. It is incumbent on the income-tax authorities to find out whether a particular income was assessable in the hands ,of the assessee or not, more so when there were glaring facts to warrant non-inclusion and non-assessment of this item of income in the hands of the present assessee, since it did neither accrue to the assessee nor arise, much less it can be said that the assessee has earned the same. Simply because, under misconceived notions and position, the assessee has credited this in its books of account, though legally this was not the assessee’s income, it does not confer jurisdiction on the Department to tax the same.
12. I will hold in favour of the assessee, since this is not the income of the present assessee-appellant–inasmuch as although the business of the assessee–the appellant, a partnership firm, is being carried on under the same name and style as the business was being carried on by the late Hiralal Padamshi, this central excise refund on exports is relevant to Samvat years 2035 and 2036 when late Hiralal Padamshi was carrying on the business as sole proprietor and that is the income of the said business–of late Hiralal Padamshi. Under Section 2(31) of the Act, an individual, a Hindu undivided family, a company, a firm, an association of persons or a body of individuals, whether incorporated or not, a local authority, and, every artificial juridical person, not falling within any of the preceding sub-clauses is defined as “person”. Every status is different in nature and is an assessable entity under the provisions of the Income-tax Act, 1961. Rupees 70,649, in no case, can be said to be the income of the present assessee-appellant, a registered firm, inasmuch as it belongs to the late Hiralal Padamshi and at best or worst it could be taxed in the hands of the legatees–beneficiaries under the will of the late Hiralal Padamshi but certainly not as income of the present assessee. I hold accordingly. The
addition made and sustained by the learned lower authorities to this extent stands deleted.
13. About other grounds, I am in agreement with my learned brother, i.e., on grounds Nos. 4 to 9, I agree with the conclusions of my learned brother.
ORDER OF REFERENCE TO THIRD member
14. Since there is a difference of opinion, vis-a-vis, conclusions arrived at in I.T.A. No. 3870/(Bom) of 1985, in the case of Padamshi Meghji v. Second ITO, involving assessment year 1982-85, we are of the opinion that the following point of difference is required to be referred to the Third Member and, for this purpose, we direct that the file be put up to the Hon’ble President. Point of difference :
“Whether, on the facts and in the circumstances of the case, amount of Rs. 70,649 is taxable or not as income of the assessee for the assessment year under appeal ?”
ORDER OF THIRD MEMBER
15. CH. G. KRISHNAMURTHY (President).–The question that arose in this reference to a Third Member made under Section 255(4) of the Income-tax Act, 1961, is whether the provisions of Section 28(iv) of the Income-tax Act, which provided for the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession is includible as the income of the assessee under the head “Profits and gains of business or profession”.
16. The assessee is a registered firm constituted under a deed of partnership dated January 17, 1980, between five persons all holding equal shares. This firm came into existence as per a deed of partnership as and from January 3, 1980. Before this firm came into existence by the above said deed, this business was being carried on by one Hiralal Padamshi Kothari, residing in Chembur, Bombay, in the name and style of “Padamshi Meghji Exporters, Bombay”, as a sole proprietary concern. The said Hiralal Padamshi died on October 2, 1980. Before he died, he executed a will on November 1, 1979, by which he bequeathed the entire business to his sons to be held by them equally in their capacity as Hindu undivided family. After the death of Hiralal, his sons formed themselves into a partnership as mentioned above and carried on the said business by taking over its assets and liabilities. During the time when Hiralal was carrying on business as sole proprietor, he exported certain goods relating to Samvat accounting
years 2035 and 2036. In respect of that business, excise duty refund of Rs. 70,649 became due. This amount was received and accounted for by the said firm in this accounting year relevant for the assessment year. The assessee claimed before the Income-tax Officer that this sum was not taxable in the hands of the firm, i.e., the assessee, on the ground that this amount was due to the deceased Hiralal and the amount received after his death could not be taxed in the hands of the legal representatives. The Income-tax Officer rejected this claim and brought the entire sum to tax under Section 28(iv) of the Income-tax Act stating that the partners of the assessee-firm succeeded to the entire business with all its assets and liabilities and, therefore, whatever gains that arose were taxable under Section 28(iv) as the value of benefit or perquisite arising from a business or the exercise of a profession.
17. Aggrieved by this inclusion, the assessee preferred an appeal before the Commissioner of Income-tax who agreed with the Income-tax Officer and confirmed the inclusion. He held that the amount of refund was due to the business and not to the individual and since the same business was continued, the refund due should be taxed in the hands of those persons who were continuing the business, namely, the firm. According to him, neither the status nor the ownership of the person who is entitled the receive and the person who received the refund were not material. He distinguished the cases relied upon by the assessee, namely, Arvind Bhogilal v. CIT [1976] 105 ITR 764 (Bom), CIT v. Executors of estate of late P.L. Paruck [1978] 113 ITR 869 (Bom) and CIT v. C. N. Caroe [1983] 141 ITR 80 (Bom). In sum, the view of the Commissioner of Income-tax was that, when the assessee-firm received the refund as successor to the proprietary business carried on by Shri Hiralal, the same became taxable. He did not refer to any particular section under which the said sum became taxable. It had to be presumed that he must have invoked the provisions of Section 28(iv) as was done by the Income-tax Officer.
18. Aggrieved by this dismissal of the assessee’s claim, the assessee preferred a further appeal before the Tribunal. After the matter was heard by the Tribunal, the learned Members differed on the conclusion. While the learned Accountant Member held that the sum was rightly taxed, the learned Judicial Member took a contrary view. According to the learned Judicial Member, the amount of refund became due to late Hiralal in his capacity as the proprietor of the business and while the assessee was of a different status, namely, the firm, and what was due to an individual and belonged to the individual cannot be said to belong to the registered firm. At best, it could be taxed in the hands of the beneficiaries under
the will but certainly not as the income of the present assessee, namely, the firm. But the learned Accountant Member held that the excise duty refund was received by the same business as “Padamshi Meghji” in which name the assessee-firm was carrying on the business which was also the trade name in which this very business was carried on when the late Hiralal was alive and, therefore, the amount belonged to the business. Since the business now carried on was the same as before, the amount was rightly brought to tax. To support his argument, he referred to the circumstance that no legal formalities were insisted upon by the excise authorities to establish that the assessee-firm was the legal representative of the deceased Hiralal. He drew support for this view from a decision of the Calcutta High Court in the case of Kesoram Industries and Cotton Mills Ltd. v. CIT [1978] 115 ITR 143. To quote, the learned Accountant Member observed: “The excise refund was received not by any individual but by the ‘business name and it was received by the firm not in its capacity as heir or legal representative of the deceased, but as an entity which was carrying on the same business”.
19. On account of divergent views, the matter had come before me as a Third Member.
20. I have heard Shri S.E. Dastur and Shri A.V. Sonde for the assessee and Shri Keshav Prasad for the Department. It was submitted before me on behalf of the assessee that a business cannot exist on its own, by its name independent of the person who owns it. There must be ownership of a business. That owner can be any person as defined in Clause (31) of Section 2 of the Income-tax Act, namely, an individual, a Hindu undivided family, a company, a firm, an association of persons or a body of individuals, whether incorporated or not, a local authority and every artificial juridical person not falling within any of the preceding sub-clauses. The assumption made by the learned Accountant Member that, since the name and style of the business continued to be the same, both when it was carried on by the late Hiralal as proprietor and by the present assessee as partners, the amount became taxable in the hands of the present assessee, is wrong because it ignores the ownership. What was due to a proprietor was received by a firm. In such circumstances, it has to be decided whether the firm could be taxed on the receipt of what was due to the proprietor. Therefore, the commonness of the name alone does not make any difference. Having said this much about the trade name and its commonness, the learned advocate for the assessee submitted that the assessee-firm was only a successor to the business. The provisions of Section 28(iv) were totally inapplicable and in this context, he referred me to the provisions
of Section 176(4) of the Income-tax Act. Relying upon a judgment of the Calcutta High Court reported in CIT v. Justice R.M. Datta [1989] 180 ITR 86, wherein this provision was interpreted, the learned advocate for the assessee submitted that, even under this provision, the sum in question was not taxable in the hands of the assessee-firm. If Section 28(iv) and Section 176(4) were both not applicable, then the only other section that could be considered for taxation of this kind of sum is Section 41(1) of the Income-tax Act. Even for that section to apply, the assessee who received the benefit of deduction and the assessee who received the benefit of refund must be the same. In this case, the assessee who got the benefit of deduction was a proprietor. He is different from the person who got the benefit of the refund which is a partnership firm and, therefore, even this section was not applicable. After referring me to several decisions on this issue; he finally submitted that, in view of the Gujarat High Court decision in CIT v. Alchemic Pvt. Ltd. [1981] 130 ITR 168, the sum in question was not at all taxable and, therefore, the order of the Judicial Member must be upheld.
21. The learned Departmental Representative, on the other hand, submitted that the present assessee is neither a successor nor a legal representative of the deceased Hiralal. There was a discontinuance of the business on the death of Hiralal, within the meaning of Section 176(3A) of the Income-tax Act. Under the provisions of Section 176(3A), if any business is discontinued, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt. The only condition being that such sum should have been includible in the total income of the person and taxed as income, had such sum been received before such discontinuance. According to him, it was this provision that applies to the facts of this case and not either Section 28(iv) or Section 176(4) or Section 41(1) of the Income-tax Act. Assuming that Section 28(iv) applies, he contended, that the expression “benefit” used therein can include receipt or cash benefit also. The decision of the Gujarat High Court in CIT v. Alchemic Pvt. Ltd. [1981] 130 ITR 168, was not applicable inasmuch as the Gujarat High Court was concerned only with the interpretation of the word “perquisites” and not the word “benefits”. But Section 28(iv) used both the words “benefit” and “perquisite”. Since the word “benefit” was not interpreted by the Gujarat High Court in CIT v. Alchemic Pvt. Ltd. [1981] 130 ITR 168, the ruling given in that decision was totally inapplicable to the facts of this case and should be ignored. With a view to show the difference between the word “perquisite” and the word “benefit” and how the Legislature used these expressions to
include even cash receipts, he made references to the provisions of Section 40(c) and 40A(5). In the end, he supported the view of the Revenue not exactly on the point that the Accountant Member had raised, but on the strength of the above submissions.
22. I have carefully considered these arguments and perused the orders of the authorities below as well as the opinions expressed by my learned brothers. First let me deal with the strongest argument put forward by the Departmental Representative in support of the Revenue’s view that Section 176(3A) would apply. I have already extracted in brief the provisions of Section 176(3A) but I would like to repeat it again ;
“176. (3A) Where any business is discontinued in any year, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the person who carried on the business had such sum been received before such discontinuance.”
23. A look at this provision would show that this would come into operation only when there was a discontinuance of business, Discontinuance of a business would mean a total cessation of business and not a continuation of the same business with a change in ownership. If a business carried on by an individual is taken over by a firm, there is no discontinuance of business, but only a succession which is provided for in Section 188 of the Income-tax Act and also in Section 187. That is not the case here at all. The business that was carried on by Shri Hiralal till and after his death was being carried on by the present assessee as a partnership. There is thus only a change in ownership but there is no discontinuance of business. The learned Accountant Member gave a categorical finding which is also supported by the Commissioner of Income-tax as well as by the Income-tax Officer that there was no cessation of business in the sense of discontinuance. That was also the view expressed by the learned Judicial Member. It cannot, therefore, be said that there was a discontinuance of business. To repeat, what happened was only a change in ownership which amounts to succession. Such being the case, the provisions of Sub-section (5A) of Section 176 can never come into operation in a situation of this nature.
24. For Section 28(iv) to apply, there must be a benefit or perquisite received, whether convertible into money or not and which must arise from business carried on by the assessee or by the exercise of a profession.
25. I am not concerned in this case with the exercise of a profession because there is no profession here.
26. In the case before the Gujarat High Court in CIT v. Akhemic Pvt. Ltd. [1981] 130 ITR 168, the facts were : The assessee which was a private limited company was served with a notice that excise duty was recoverable in respect of certain chemicals sent from one mill to another mill. On the one hand, the assessee-company paid the amount on excise duty and, on the other, it recovered a part of it from its constituents but contended before the excise authorities that duty was not leviable at all. The assessee succeeded and a certain amount became refundable to it by the Excise Department in the calendar year 1970, that amount was credited by the assessee to the profit and loss account. The assessee claimed before the Income-tax Officer that this amount was not taxable because it was of a casual and non-recurring nature. But the Appellate Assistant Commissioner, on appeal, accepted the assessee’s contention following an earlier order of the Tribunal in the case of the same assessee. In a further appeal filed before the Tribunal, it was argued on behalf of the Revenue that the said amount was taxable under Section 28(iv) of the Income-tax Act as the value of any benefit arising from business. Alternatively, the provisions of Section 41(1) also were pressed into service. The Tribunal held that, on the language of Section 28(iv), what was received from the Excise Department was money and not something the value of which was required to be converted into money, and therefore, the provisions of that section would not apply. Thereafter, there was a reference to the Gujarat High Court. Dealing with this argument and the interpretation of the provisions of Section 28(iv), the Gujarat High Court observed at page 173 of the report as under :
” So far as the question of Section 28(iv) of the Act is concerned, Section 28(iv) provides that that income falling under Clause (iv) of Section 28 shall be chargeable to income-tax under the head ‘Profits and gains of business or profession’. Clause (iv) provides :
‘the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession.’
It is obvious that if what is received either by way of benefit or perquisite is money, there is no question of considering the value of such monetary benefit or perquisite under clause (iv) and including the value of such benefit or perquisite under the head ‘Profits and gains of business or profession’. It is only if the benefit or the perquisite is not in cash or money but is non-monetary benefit or non-monetary perquisite that the
question of including the value of such benefit or perquisite would ever arise. Under these circumstances, the Tribunal was right in rejecting the contention urged on behalf of the Revenue that the amount of Rs. 15,964 should be brought to tax as value of any benefit or perquisite within the meaning of Section 28(iv). The Tribunal doubted whether the amount of Rs. 15,964 was any benefit–‘It may or may not be a benefit’. Another question is whether the phrase ‘Whether convertible into money or not1 would normally mean something else than money. In our opinion, the conclusion of the Tribunal that Section 28(iv) would not apply when the amount received in cash or is considered in terms of money, is correct, and the provisions of Section 28(iv) can never be made applicable to the facts of the present case, where excise refund was received by the assessee.”
27. This would show that the Gujarat High Court decision covers the words both “benefit” or “perquisite” and not only “perquisite” as was urged by the learned Departmental Representative and it appears to be a direct decision on the issue. The facts in the present case are exactly similar to the facts in the case before the Gujarat High Court. Applying the decision of the Gujarat High Court, the cash receipt by the assessee-firm cannot be said to be a benefit or perquisite within the meaning of Section 28(iv) and, therefore, is not includible in the income of the assessee which was the attempt of the Department all through. It is not necessary for me to go into other aspects of the case since the case of the Department pleaded before me was mainly on the ground of the application of either Section 28(iv) independent of Section 176(3A) or Section 176(3A). It is true that this aspect was not gone into in this manner by my learned brothers particularly, the Accountant Member. Since the Gujarat High Court covers the issue fairly, I respectfully follow the judgment and hold that the sum in question was not taxable.
28. Before I conclude, I would like to mention that the view expressed by the learned Accountant Member that, because of the sameness of the business, the amount is taxable is not a sustainable argument. A business cannot exist without ownership. It is the ownership that matters and not the business name. The learned Accountant Member has confused the business name for the ownership. This in my view is not proper. I agree with the view expressed by the learned Judicial Member and hold that the sum in question is not taxable in the hands of the assessee-firm.
29. The matter will now go before the regular Bench for disposal of the case in accordance with the opinion of the majority.