Commissioner Of Income Tax vs Prof. P.G.A. Nath
1997 Latest Caselaw 718 Del

JUDGMENT

R.C. Lahoti, J.

1. By this application under s. 256(2) of the IT Act, 1961, the Revenue seeks a mandamus to the Tribunal to draw up a statement of case and refer the following question of law for the opinion of the High Court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that a sum of Rs. 1,22,062 is gift received from foreign nationals and not professional receipts ?"

2. The Tribunal has opined that it was a factual finding of the Tribunal and no referable question of law arose more so in the light of the decision of the Supreme Court in P. Krishna Menon vs. CIT .

3. The facts in brief as emerging from the order of the Tribunal : The assessee is an astrologer, musician and palmist. During the asst. yr. 1989-90, he received an amount of Rs. 1,22,062 from five persons from abroad which according to the assessee were not for any professional services rendered but out of personal regard and admiration they held for him as a spiritual guru. He pointed out that his well-wishers and friends had invited him abroad to visit them. He did so at their expense and out of respect and regard for him they gave certain amounts in foreign currency which he brought to India through banking channels and deposited in the bank. Since these gifts were not for any professional services, they should not be regarded as professional receipts and brought to tax.

The AO declined to accept the contention of the assessee. The finding of the AO was maintained in appeal by the CIT, forming an opinion that the relationship between the assessee and his clients was that of a teacher and disciple and all the amounts received by the teacher from the disciples were in the nature of professional fee even though they were gifted.

4. The Tribunal has recorded the following finding in its appellate order dt. 4th January, 1994 :

"The assessee had clearly stated that he went abroad only at the request of his. well-wishers and friends and as a token of their appreciation for his personal qualities, they made certain gifts and those gifts were not for any professional services rendered. The assessee in the affidavit filed before the authorities below clearly brought out the fact and there was nothing brought on record to show that the contents in the affidavit were false, but it was only interpreting those contents, that the Department has come to the opposite view, that in spite of the fact that the assessee asserted that no professional services were rendered to them and yet gifts were received out of admiration those donors had for him, the amounts were taxable. That the Department treated the receipts in India and abroad as of one and the same character, it was assumed that in foreign countries also the assessee rendered professional services but this was without any material, only a conjecture. In the absence of any evidence to show and from any material to suggest that these amounts were received for professional services rendered, these amounts cannot be brought to tax. It cannot be assumed that merely because the assessee had visited the foreign countries at the request of his well-wishers and friends, he rendered professional services there. This fact is borne out by the affidavits filed by the donors. Each one of the donors had clearly pointed out that he or she had great respect for the professor, i.e., the assessee, and hence in gratitude, affection and love that he or she felt for the assessee, the above sum was gifted. They have never said that it was for professional services rendered. It, therefore, cannot be assumed, with out any evidence, that professional services were rendered all because the assessee had received gifts from a person who had admiration for him. Before these sums are brought to tax, it is essential that a nexus between the rendering of professional services and the receipt of the money must be established, if not directly at least indirectly. This nexus cannot be assumed merely on the ground that the assessee's profession was that of an astrologer and he went abroad at the invitation of his well-wishers. Though the goodwill and the respect was earned by the assessee by dint of his past performance, the amounts could not be said to have been paid to him by way of remuneration for any past or present services nor is there any proof to show that the services were rendered at the time of receiving the gifts. The contents of the affidavit and the unambiguous certificates given by the donors should not have been disbelieved without any material to the contrary merely on the ground of suspicion. We are therefore, of the opinion that the Department is not justified in bringing these sums to tax as professional receipts of the assessee in violation, of the principle laid down by the Supreme Court in the cases referred to above and also by the Madras High Court in the cases referred to earlier."

5. The Tribunal has in its order referred to the decisions of the Supreme Court in Mahesh Anantrai Pattani vs. CIT and Parimisetti Seetharamamma vs. CIT , as also to the decisions of the Madras High Court in CIT vs. M. Balamuralikrishna (1988) 171 ITR 447 (Mad) : TC 38R.333, CIT vs. S. A. Rajamanickam (1984) 149 ITR 85 (Mad) : TC 13R.211 and CIT vs. Dr. B. M. Sundaravadanam (1984) 148 ITR 333 (Mad) : TC 13R.213.

6. We have heard Mr. R. D. Jolly, the senior standing counsel assisted by Ms. Premlata Bansal, junior standing counsel for the Revenue, and Salil Aggarwal and Pradeep Srivastava, advocates for the respondent. Having heard learned counsel for the parties, we are of the opinion that no referable question of law arises from the order of the Tribunal, i.e., on the facts found by the Tribunal, and hence no mandamus can be issued to the Tribunal.

7. Learned counsel for the Revenue has referred to the decisions of the Supreme Court in Dr. K. George Thomas vs. CIT and P. Krishna Menon vs. CIT .

8. In Dr. K. George Thomas case (supra), the assessee was a spiritual teacher and coming out with a daily circular propagating his views. Teaching and propagating religion was his occupation. He received donations. The Tribunal arrived at the following finding (p. 419) "The assessee carried on a vocation of preaching against atheism. In the course of such vocation and for the purpose of the same, he received the amounts in question as donation for the furtherance of the objects of his vocation. The receipts arose to the assessee from the carrying on of the vocation by the assessee and these were not casual and non-recurring.. These were taxable."

In the background of the above said finding of fact their Lordships took stock of the case law available on the point and then proceeded to hold as under (p. 420) :

"The burden is on the Revenue to establish that the receipt is of a revenue character. Once a receipt is found to be of a revenue character, whether it comes under exemption or not, it is for the assessee to establish. Facts must be found by the Tribunal and the High Court must proceed on the basis of the facts found by the Tribunal. The High Court cannot afresh go into the facts overruling the facts found by the Tribunal unless there is a question to that effect challenging the facts found by the Tribunal. These propositions are well-settled and in this case in the decision of the High Court, these principles, in our opinion, have not been breached. It has been established that the assessee was carrying on a vocation, the vocation of preaching of Christian gospel and helping anti-atheism was the vocation of his life. He was running a newspaper in aid of that. The donations received from America were to help him for the said purpose. They arose out of his carrying on and continued so long as he carried on this avocation or vocation. These receipts, therefore, arose out of his vocation. These were, therefore, his income. In the facts, these were not exempt under s. 4(3) (vii) of the Act. In the premises, these were taxable." Their Lordships concluded that in view of the facts and circumstances of the case there was a link between the activities of the assessee and the payments received by him and the link was close enough.

9. In P. Krishna Menon vs. CIT (supra), the assessee was teaching Vedanta which was his vocation. Levy, one of his disciples, used to come to Travancore from England at regular intervals and stay there for a few months at a time and attend the discourses given by the appellant and so received instructions in Vedanta and had the benefit of his teaching. The disciple transferred more than Rs. 2 lakhs from his bank account to the account of the assessee and thereafter put in further sums into the assessee's account. The question was whether the receipts constituted the assessee's income. Their Lordships held :

"We find it impossible to hold in this case that the payments to the appellant had not been, made in consideration of the teaching imparted by him. Levy admitted that he had received benefit from the teaching of the appellant. It is plain to us that it was because of the teaching that the gift had been made. It is true that Levy said that he made the gifts to mark his esteem and affection for the appellant. But such emotions and, therefore, the gifts, were clearly the result of the teaching imparted by the appellant."

The test laid down by their Lordships was that the imparting of the teaching being causa causans to the making of the gift it was not merely a causa sine qua non. The payments were repeated and came with the same regularity as the disciple's visits to the assessee for receiving instructions in Vednta.

It is clear that in both the cases treating of the income as arising from the vocation/occupation of the assessees respectively in the two cases was based on the facts found.

10. Learned counsel for the assessee has relied on the Supreme Court decision in Gaud Prasad Bagaria vs. CIT and a Division Bench decision of the Delhi High Court in CIT vs. Mrs. Sunita Vachani (1990) 184 ITR 121 (Del) : TC 55R.169.

In Gauri Prasad Bagaria's case (supra) their Lordships of the Supreme Court have held :

"When the assessee's statement was believed, there was obviously material on which the finding of the Tribunal was based; and to seek for other material was tantamount to saying that a statement made by an assessee was not material on which a finding can be given. The Tribunal having believed the assessee's statement, there was an end of the matter in so far as that fact was concerned, and if the finding was based upon a statement which was good material on, which it could be based, no question of law really arose."

Mrs. Sunita Vachani's case (supra) related to gifts which were held to be genuine by the Tribunal. Their Lordships held :

"The Tribunal had, on merits, come to the conclusion that the gifts were genuine. This is a pure question of fact. The Tribunal has examined the evidence which was available on the record and has arrived at the aforesaid finding. Even though it may be surprising as to how large sums of money are received by a family in India by way of gifts from strangers from abroad, unless there is something more tangible than suspicion, it will be difficult to regard the moneys received in India from abroad as representing the income of the assessee in India. On the facts as existing on the record, we are unable to come to the conclusion that any question of law arises."

11. The decisions relied on by learned counsel for the assessee clinch the issue. The Tribunal has on appreciation of evidence chosen to believe the assessee and the affidavits of the donors filed by the assessee and concluded that the receipts were gifts and not revenue receipts of the assessee. It is purely a finding of fact. No referable question of law arises from the order of the Tribunal. The Tribunal did not err in rejecting the application under s. 256(1) of the Act filed by the Revenue.

12. Consequently, this application under s. 256(2) of the Act is rejected though without any order as to the costs.