Income Tax Appellate Tribunal - Ahmedabad
N.J.P. vs Income-Tax Officer on 1 January, 1800
Equivalent citations: [1982]1ITD526(AHD)
ORDER
D.D. Vyas, Judicial Member
1. This is an appeal by the assessee pertaining to the assessment year 1979-80.
2. The assessee is an individual. The ITO while going through the salary account of the assessee found that a sum of Rs. 3,001 was paid io Smt. K.N.P., wife of the assessee. On the query made by the ITO it was found that the said expenditure was not allowable in view of Section 64(1)(ii) of the Income-tax Act, 1961. The assessee explained that salary was paid to her wife for writing books of account. She was possessing technical or professional qualifications and the income was solely attributable to the application of her technical or professional knowledge and experience.
3. The ITO was of the view that the wife of the assessee was not having professional or technical qualifications and as such the payment of salary to her was hit under Section 64(1)(a). Consequently, the ITO disallowed the claim.
4. The learned AAC found that the wife of the assessee was only a matriculate and salary was paid to her for writing books of account. According to him, the wife of the assessee might have done clerical work but that does not entitle her to receive salary from her husband. So, he agreed that the finding of the ITO is correct.
5. Before the Tribunal, the learned counsel for the appellant contended that the learned AAC erred in confirming the disallowance of the salary payment of Rs. 3,001 per annum paid to the wife of the appellant. The wife of the appellant has been writing accounts of the firm in which her husband is one of the partners. In computing the total income of any individual, there shall be included all such income as arises directly or indirectly to the spouse of such individual by way of salary, commission, fees or other form of remuneration whether in cash or in kind from a concern in which such individual has a substantial interest. According to the learned counsel for the assessee, the case of the assessee is governed by the provisions of Section 64(1)(ii). The wife of the assessee possesses technical or professional qualifications and the payment of salary was solely attributable to the application of her technical or professional knowledge and experience.
6. The learned departmental representative contended that the wife of the assessee is only a matriculate and she was not having any technical or professional qualification and as such the learned AAC rightly sustained the order of the ITO disallowing the payment of salary of Rs. 3,001 claimed by the assessee.
7. I have considered the rival submissions and perused the entire material on record. The wife of the assessee is definitely a matriculate. She was paid salary of Rs. 3,001 for writing hooks of account. So, the question for determination is whether writing of books of account would come within the provisions of Section 64(1)07), which states that nothing in this clause shall apply in relation to any income arising to the spouse where the spouse possesses technical or professional qualifications and the income is solely attributable to the application of his or her technical or professional knowledge and experience. If on the facts of the case, it is held that the wife of the assessee was possessing technical or professional qualifications, the claim of the assessee will be allowable.
8. The word "technical" implies some practical knowledge of mechanical or scientific subjects or relating to any particular subject. In this connection, Webster's Third New International Dictionary (2nd edn., page 2140) refers the expression "technical" to a person skilled in or practically conversant with some particular subject ; belonging or relating to an art or arts ; appropriate or peculiar to, or characteristic of, a particular art, science, profession or occupation.
9. Thus, the term "technical" is understood to include certain characteristics of specialisation relatable to a particular subject. The term "profession" is sometimes used in a narrow sense so as to mean the learned professions or an occupation requiring a high level of training and proficiency. In a wide sense, it means any calling involving intellectual skill or manual skill ultimately controlled by intellectual skill. In a still wider sense, it means any calling or occupation by which a person habitually earns his living. This is as per the Shorter Oxford English Dictionary. Thus, while the narrow meaning of "profession" implies specialised knowledge and intensive training and preparation preceded by instructions in skills and methods, a reasonably broader or wider meaning given to "profession" would mean any occupation or vocation requiring intellectual skill or requiring manual skill as controlled ultimately by intellectual skill. Reference may be made to ratio of the decision in the case of CIT v. Manmohan Das [1965] 59 ITR 699 (SC).
10. Looking to the words used in the provisions of Section 64(1)(ii), in my opinion, a wide and liberal construction should be made of the words technical or professional qualifications. A profession means any vocation or occupation by which a person earns his living. However, it involves, in my opinion, the exercise of intellectual skill or of manual skill as controlled by intellectual skill. The cases of chartered accountants, doctors, singers, etc., would certainly come within the ambit of the aforesaid words. In fact, the Supreme Court had occasion to discuss the word "profession" under the Expenditure Tax Act in the case of a politician and it was held that "politics" is a "profession"---CET v. P.V.G. Raju [1975] 101 ITR 465 (SC). In my opinion, even a stenographer's job cannot be said to be a mere mechanical job as some intellectual skill is required. A typist can sit outside an office and earn income from typing for his clients. Similarly, an accounts-keeper may earn his livelihood by keeping accounts for half a dozen persons and earn his livelihood independently and without accepting any employment as such. Keeping accounts or writing accounts can be considered as calling professional skill, even when he works under one employer provided the mode of keeping accounts call for intellectual skill. Therefore, an indication or a test for finding whether professional skill is involved is to see whether it requires or postulates intellectual skill and can furnish a source of independent livelihood to the person though that person might accept employment from his or her spouse. If, on the other hand, the skill is such that it is not possible, hypothetically or objectively speaking, to earn an independent livelihood as in the case of a professional typist or a professional accounts-keeper, it will not be possible, to term it as involving professional qualifications. Again "technical" would involve specialised training in a mechanical or scientific subject or in any particular subject.
11. In the present case, the wife of the assessee has been writing accounts. The payment of the. salary was solely attributable to the application of her technical or professional knowledge and experience. To write books of account would certainly require intellectual skill. Under the circumstances, the wife of the assessee had possessed technical or professional qualifications and the income was solely attributable to the application of her technical or professional knowledge and experience. The learned A AC was wrong in sustaining the disallowance of Rs. 3,001. Accordingly, the assessee is entitled to claim salary payment of Rs. 3,001 to his wife and his case comes within the provisions of Section 64(1)(a).
12. In the result, the appeal is allowed.