Patna High Court
Commissioner Of Income-Tax vs 1. Sarbamangala Devi. (T. C. Nos. 255 To ... on 20 March, 1986
Equivalent citations: (1987)55CTR(PAT)41, [1987]163ITR898(PATNA)
JUDGMENT
NAZIR ANAND J. - A consolidated statement of the case has been submitted by the Income-tax Appellate Tribunal, Patna Bench A, Patna (hereinafter referred to as "the Tribunal"), under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), referring the following common question of law for the opinion of this court :
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the receipts of pranamis were casual and non-recurring and exempt under section 10(3) of the Income-tax Act, 1961 ?"
The relevant facts of the case can be culled from the statement of the case as well as from the assessment orders of the Income-tax Officer and the orders of the Appellate Assistant Commissioner. Smt. Sarbamangala Devi is the widow, and Mr P. R. Chakravarty is the son of late Guru Anukul Chandra Thakur. These two assessees are mother and son. Smt. Sarbamangala Devi is an employee of satsang and gets salaries therefrom and she looks after the female section of the organisation in consideration of which she is being paid salaries by her employer. This will be evident from the assessment orders of Smt. Sarbamangala Devi. In the assessment years 1963-64, 1964-65, 1965-66 and 1966-67 the assessee, Smt. Sarbamangala Devi, filed returns in pursuance of the notice served under section 148 of the Act. The assessee received the following amounts as pranamis :
Assessment year 1963-64 . . .
Rs. 8,440 Assessment year 1964-65 . . .
Rs. 9,327 Assessment year 1965-66 . . .
Rs. 8,648 Assessment year 1966-67 . . .
Rs. 10,265 Dr. P. R. Chakravarty is also an employee of the satsang and gets his salaries therefrom. He is a qualified doctor and looks after the hospital of the satsang, as will be evident from paragraph 3 at page 44 of the paper book. He also received the following amounts as pranamis :
Assessment year 1963-64 . . .
Rs. 6,200 Assessment year 1964-65 . . .
Rs. 4,654 Assessment year 1965-66 . . .
Rs. 4,325 Assessment year 1966-67 . . .
Rs. 6,442 As stated above, the assessee is a doctor serving in the hospital of the satsang.
Both the aforesaid assessees showed the amounts of pranamis in Part IV of the return and it was stated that these amounts of pranamis represent gifts received by the assessees from different disciples and followers of satsang. A list was also furnished showing the names of the alleged donors. It was also contended that the receipts are from different persons and are of varying amounts and these receipts have been given by the donors out of reverence, love and affection to the assessees and so they should be treated as casual and non-recurring and hence exempt under section 10(3) of the Act. The Income-tax Officer found that the question of assessability of similar receipts came up for consideration by the Appellate Assistant Commissioner in appeals relating to the assessment years 1967-68 to 1971-72, and it was held by the Appellate Assistant Commissioner that such receipts were qualified for exemption under section 10(3) because there is no continuity of receipt and they are of casual and non-recurring nature. The Appellate Assistant Commissioner also took the view that the assessees are not preachers of satsang cult and, therefore, these receipts did not arise from the exercise of a profession by the assessees. The Income-tax Officer held that it is a fact that the receipts are from different persons and the amounts are varying in each case, as submitted on behalf of the assessees. The Income-tax Officer also admitted that it is also a fact that the assessees have got no legal rights over the sums. The attention of the Income-tax Officer was also drawn to the aforesaid decision of the Appellate Assistant Commissioner but the Income-tax Officer held as follows :
"1. The assessees are the wife and son of Anukul Chandra Thakur, the Guru and founder of satsang and the amounts received from the different persons are by way of the pranamis on the Guru.
2. All the persons who have paid pranamis are disciples of satsang, and hence they constitute a source in a group.
3. There may not be legal compulsion on the part of the disciples to pay pranamis but it is a well known fact that the followers of Hinduism hold not only the Guru in high esteem but also the entire Guru Charana and they consider it to be a religious duty to give pranamis to the Guru Charana and thus contribute to the maintenance of the Guru family.
4. The disciples and followers of satsang constitute a definite source of income and the receipts of pranamis recur from year to year."
In view of the aforesaid reasons, the Income-tax Officer included in the income of the assessees the various pranamis amounts as mentioned above in the assessment relating to both the assessees. The assessment orders of the Income-tax Officer relating to Smt. Sarbamangala Devi for the assessment years 1963-64 to 1966-67 have been annexed and marked as annexures A-1 to A-4 forming part of the statement of the case. The assessment orders relating to Dr. P. R. Chakravarty for the assessment years 1963-64 to 1966-67 have been annexed and marked as annexures B-1 to B-3 forming part of the statement of the case.
The assessees appealed before the Appellate Assistant Commissioner for all the four assessment years. The Appellate Assistant Commissioner passed two separate orders on February 17, 1975; one relating to Smt. Sarbamangala Devi and the other relating to Dr. P. R. Chakravarty. In the case of Smt. Sarbamangala Devi, the Appellate Assistant Commissioner, following the order of the Tribunal in Income-tax Appeal Nos. 806 to 810 (Pat) of 1973-74, held that the pranamis amounts were not taxable and so he deleted the additions relating to the pranami amounts in all the four assessment years.
In the case of Dr. P. R. Chakravarty, the Appellate Assistant Commissioner following the order of the Tribunal relating to the assessment years 1967-68 to 1971-72, held that the pranami amounts are not taxable and so he deleted the additions The two orders of the Appellate Assistant Commissioner have been annexed and marked as annexures C and D respectively forming part of the statement of the case.
The Department, aggrieved by the orders of the Appellate Assistant Commissioner, filed eight appeals against both the assessees and the Tribunal disposed of all the eight appeals relating to both the assessees by a consolidated order dated November 10, 1975. The Tribunal, following the orders dated November 27, 1974, in Income-tax Appeal Nos. 815 to 819 (Pat) of 1973-74 and Income-tax Appeal Nos. 806 to 810 (Pat) of 1973-74 in the case of the two assessees in respect of the assessment years 1967-68 to 1971-72, held that the Appellate Assistant Commissioner was justified in deleting the additions and dismissed the departmental appeals. This order of the Tribunal has been annexed and marked as annexure B forming part of the statement of the case. Hence, the aforesaid question has been referred to this court under section 256(1) of the Act for the opinion of this court.
I have already pointed out above that the Tribunal relied on the decisions in Income-tax Appeal Nos. 815 to 819 (Pat) of 1973-74 and Income-tax Appeals Nos. 806 to 810 (Pat) of 1973-74, relating to the assessment years 1967-68 to 1971-72, which related to the two assessees. This order of the Tribunal was passed on November 21, 1974, and it has been annexed and marked as annexure F forming part of the statement of the case.
It has been specifically pointed out by the Tribunal at page 42 in paragraph 9 of the paper book that the findings of fact of the Appellate Assistant Commissioner based on the remand report of the Income-tax Officer are that the lady is not a preacher and it is not her profession to preach and in the case of the doctor, it was found by him from the papers on record and the papers produced by the assessees that the satsang organisation had only one Guru and he was the only preacher to his disciples and there was nobody else who had the right to preach the satsang cult and receive any amount as consideration for preaching from the disciples or others. It was also pointed out by the Tribunal that the salary had been offered by the assessees for taxation and subjected to tax and that the dispute does not centre round it but the dispute centres round the offerings received as a matter of gratitude and that such offerings are spontaneous and they have no pre-thought about it. It has also been observed that a voluntary offer may have pre-thinking about it but the spontaneous offering has no element of physical thinking or physical activity and whatever is done spontaneously by an individual without a pre-thought, without pre-design, without a purpose, without a motive and without consideration, cannot be taken as exchange of money which may be taken as carrying on of a vocation (sic). The Tribunal also found that there was a complete element of spontaneity in what was offered and there is no element of regularity of these spontaneous offerings because the offerings are not by the same person from time to time. It was also held that there being no regularity about it, there being no chance of anticipated recurrence of such offerings, it cannot be taken as a regular and recurring source of receipt. The Tribunal also held on the appraisal of the materials on record that the receipts of the two assessees in all the five years have no element of regularity and cannot be anticipated to recur and they are absolutely unpreplanned and spontaneous, and so the Tribunal held that it was a casual and non-recurring receipt.
Thus it is evident that the pranamis is not offered by the same individual every year. It also cannot be doubted that the pranamis is a gift to both the assessees and they are receipts from different persons and of varying amounts, and that these gifts were made out of reverence, love and affection to the widow and son of late Guru. It also cannot be doubted that the two assessees, widow and son of the Guru Anukul Chandra Thakur, are not doing any preaching work, rather they are employees of the satsang drawing salaries from satsang.
Under such circumstances the only question which has to be considered is as to whether a voluntary gift by the disciples and followers of satsang to the assessees out of reverence, love and affection can be treated as a taxable income or a receipt of a casual and non-recurring nature.
Mr. B. P. Rajgarhia, for the Revenue, has relied on various decisions. He has relied on the case of P. Krishna Menon v. CIT [1959] 35 ITR 48 (SC), which is a decision by their Lordships of the Supreme Court of India. In this case, after his retirement from Government service, the appellant was spending his time in studying and teaching vedanta philosophy. L, who was one of his disciples, used to come from England at regular intervals to Trivandrum, where the appellant resided, and stay there for a few months at a time and attend his discourses and so received instructions in vedanta and had the benefit of his teachings. L transferred the entire balance standing to his credit in his own account at Bombay, amounting to more than Rs. 2 lakhs, to the account of the appellant opened in the latters name in the same bank at Bombay. Thereafter, from time to time, L put in further sums into the appellants account in Bombay. The question was whether the receipts from L constituted the appellants income taxable under the Travancore Income-tax Act, 1121, which was identical to the Indian Income-tax Act, 1922 (hereinafter referred to as "the old Act"). It was also held by their Lordships of the Supreme Court 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. It was also held by their Lordships of the Supreme Court 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 even though it was carried on without the motive of producing an income. It was also held by their Lordships of the Supreme Court 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, that it was impossible to hold that the payments to the appellant had not been made in consideration of the teaching imparted by him, and that, therefore, the payments were income arising from the vocation of the appellant. It was also held by their Lordships of the Supreme Court that as the payments made by L were income arising from a vocation, they were not casual and non-recurring receipts and no question of exemption under section 4(3)(vii) of the old Act arose. It was also held in this decision that in order that a payment may be exempted under section 4(3)(vii) of the old Act, as a casual and non-recurring receipt, it has to be shown that it did not arise from the exercise of a vocation. Thus, it is evident that in this case it was held that the income of the appellant was from a vocation and so they were not casual and non-recurring receipts and could not be exempted. It is admitted in the present case that the assessees are the employees of the satsang and they are not doing any teaching work and so this decision will not be applicable in the case of these two assessees before us.
Mr. B. P. Rajgarhia has also relied on the case of Ramanathan Chettiar v. CIT [1967] 63 ITR 458 (SC). In this case, it was held that a receipt of interest which was foreseen and anticipated cannot be regarded as casual even if it is not likely to recur again. In this decision, it was also held that the interest granted under the decree of a court and calculated upon the footing that it accrued de die in diem has the essential quality of recurrence which is sufficient to bring it within the scope of the old Act and so it was held that the amount of interest received by the assessee was in the nature of revenue receipt and that the receipt was not of casual and non-recurring nature and was, therefore, not exempt from tax under section 4(3)(vii) of the old Act. Of course, this is a decision of the Supreme Court but the facts of this case are entirely different from the facts of the present case before us and it will not be applicable to the case of the two assessees before us.
Mr. B. P. Rajgarhia has also relied on the case of Amarendra Nath Chakraborty v. CIT [1971] 79 ITR 342, which is a decision of the Calcutta High Court. In this case, the assessee was the ritwik of a satsang and for his work as a ritwik he received a salary from the institution. In his capacity as a ritwik he initiated disciples into the satsang cult and received offerings from such disciples. A disciple made a gift of a piece of land valued at Rs. 40,000 to the assessee in the town of Calcutta. It was found as a fact that the assessee preached the cult of the satsang generally and that for several years he had preached that cult to the donor. It was further found that as a result of this preaching, the donor received mental enlightenment and spiritual benefit bringing about a complete change in her outlook on life. The donor stated in the deed of gift that in consideration of those benefits which she had received from the assessees preaching of the satsang cult, the gift of land was being made. In this connection, it was held by the Calcutta High Court that the gift was strictly traceable to the assessees vocation as a preacher of the satsang cult and 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 assessees vocation as a religious teacher and was, as such, taxable in his hands. In the present case before us, the assessees are not preaching to the disciples of satsang and so this decision will not be applicable to the case of the assessee in the present case before us.
Mr. B. P. Rajgarhia has also relied on the case of K Sankaran v. CIT [1978] 115 ITR 561, which is a decision of the Kerala High Court. In this case, the assessee retired as Chief Justice of the Kerala High Court in 1960. Between the assessment years 1962-63 and 1972-73 the assessee was appointed as arbitrator or as a commission in certain matters for which he received remuneration. The Tribunal held that the remuneration received by the assessee was not of a casual nature and was income liable to tax. The Kerala High Court held that the activities of the assessee undoubtedly constituted "occupation" within the meaning of section 10(3) of the Act and that the remuneration derived by the assessee was from an "occupation" and not of a "casual" nature. It was also held in this decision that from section 10(3) of the Act it will be seen that unless a receipt satisfies the dual test of being of a casual and of a non-recurring nature, it will not qualify for exemption from taxation and also even if the receipt satisfies the two tests, it will not be eligible for exemption if it is derived from business, or the exercise of a profession or occupation. On this basis, Mr. B. P. Rajgarhia has submitted that even if the receipt is not derived from business or exercise of a profession or occupation, even then the court has to see whether the receipt is of a casual and non-recurring nature and if the receipt is held not to be of a casual and non-recurring nature, then the receipt will be taxable.
On the whole, the decisions cited by Mr. B. P. Rajgarhia were all on different facts. In those cases, it was held that the receipts arose from business or exercise of a profession or occupation. It cannot be doubted that in the assessment years 1963-64 to 1966-67, under section 10(3) of the Act, the entire receipts which were of a casual and non-recurring nature were exempt from taxation, and they were not to be included in the total income of the assessees.
Mr. L. N. Rastogi, learned advocate for the assessees, has relied on the case of Rani Amrit Kunwar v. CIT [1946] 14 ITR 561 which is a decision of the Allahabad High Court. In this case, the assessee was the wife of the Ruler of the Kalsia State and the sister of the Maharaja of Nabha State. She was residing at Dehra Dun in British India for some years with her sons and daughters. In the assessment year, she received a sum of Rs. 14,744 from the Kalsia State and Rs. 8,910 from the Nabha State. It was found that similar payments had been made to the assessee of varying amounts in all the years she had lived at Dehra Dun and that they represented allocations for her benefit made in the relative State budgets. In the case of payments from the Kalsia State, they were made for the purpose of meeting the assessees household and living expenses and the education of her children and in the case of the allowance from Nabha State, it was made as an annual "wardrobe allowance" and as presents on certain days of festivals each year. She was not bound to account for the moneys although the payments appeared in the State budgets as State expenditure. There was no dividing line between the part of the income of the State which the Ruler spent for public purposes and that part which he spent for his private purposes, and in those circumstances it was held that the allowances received by the assessee from the Kalsia State were remittances from her husband and were taxable as income which must be deemed to have accrued to the assessee in British India under section 4(2) of the old Act, and the question whether the remittances received by her were casual and non-recurring did not arise. It was also held that as there was no evidence in the case to show that the payments made by the Nabha State were attributable to custom, usage or traditional obligation and there was consequently no origin for the payments which could amount in its nature to a definite source so as to render each payment "income" and not merely a casual or annual windfall, these payments were not "income" and were not assessable to income-tax. It was also held in this decision that under the old Act, income in order to be taxable need not arise from any business activity, investment or an enforceable obligation to pay but may arise from voluntary or customary payments. Nor is it necessary that it should be the result of some outlay on the part of the assessee. It has also been held in this decision that the words "non-recurring nature" in section 4(3)(vii) mean not that the payments have as a matter of fact not recurred but that they are not bound to recur. From this decision, it is evident that the amount received by the wife of the Ruler of the Kalsia State was treated as income because she was receiving it from her husband. However, as regards the payment made by Nabha State, there was no evidence that the payments were attributable to custom usage or traditional obligation and there was consequently no origin for the payments which could amount it its nature to a definite source and so it was held that the payments from Nabha State were merely a casual or annual windfall, these payments were not income and were not assessable to income-tax. Thus, the assessee is supported relating to payments from Nabha State. This is a casual or annual windfall and will not amount to taxable income.
Mr. L. R. Rastogi has also relied on the case of H. H. Maharaja Rana Hemant Singhji v. CIT [1971] 79 ITR 83 which is a decision of the Rajasthan High Court. In this case, on the merger of the Dholpur State, the question arose whether the "Dholpur House" should be treated as private property of the ruler or the property of the State of Rajasthan. By letter dated October 30, 1961, the Government of India informed the Maharaja of Dholpur that the said house would be considered to be the property of the Rajasthan State, but 1/3rd of the rental value would be paid to His Highness as a purely ex gratia arrangement, and in the event of the sale of the house, His Highness would be entitled to 1/3rd of the sale price minus the share of the Government of India in the form of 75% of the incremental value. The fact that the payment to the Raja was only an ex gratia payment was emphasised by the Government in subsequent correspondence also. 1/3rd of the rent was continued to be paid to His Highness Maharaja Udai Bhan Singhji till his death and, thereafter, to Her Highness Malvindar Kaur, and then, to His Highness Maharaja Hemant Singhji, who was recognised as the ruler of the Dholpur State. These payments ceased when the said property was sold out. For the assessment years 1953-54, 1954-55, 1955-56, 1956-57, 1958-59, 1960-61, 1961-62 and 1962-63, the income from this property was taxed under section 9 of the old Act, and for the assessment years 1957-58 and 1959-60, the income from this property was taxed under section 12 of the old Act by the Income-tax Officer. In the appeals by the assessee, the Appellate Assistant Commissioner took the view that the payments received by the assessee were casual receipts and were exempt from taxation under section 4(3)(vii) of the old Act. The Tribunal reversed the order of the Appellate Assistant Commissioner. In those circumstances, it was held by the Rajasthan High Court that the various amounts received by the assessee were exempt from payment of tax as they did not form part of the taxable income being receipts of a casual and non-recurring nature : Merely because the Government of India continued to make payment for several years, they did not cease to be casual receipts : they were casual and non-recurring in nature inasmuch as they depended on the good wishes of the Government of India. Thus, this decision clearly shows that if a gift is made without any legal liability and depends on the good wishes of the donor, then it has to be held that it is a receipt of a casual and non-recurring in nature.
Mr. L. N. Rastogi has also relied on the case of Dilip Kumar Roy v. CIT [1974] 94 ITR 1 which is a decision of the Bombay High Court. In this decision, it has been held that in all the cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision. It has also been held in this decision that merely because an assessee carries on a vocation, there is no presumption in law that any amounts received by him is income and has to be taxed and that the test in such cases is to find out if the sum is paid to the assessee in respect of his services and accrues to him by virtue of his office. It has also been held in this decision that where an amount is paid to a person as a personal gift for his personal qualities and as a token of personal esteem and veneration, it cannot be subjected to tax as income arising out of the business, profession or vocation under section 10 of the Act. Thus, it is evident that a personal gift as a token of personal esteem and veneration is not taxable.
Mr. L. N. Rastogi has also relied on the case of CIT v. Ramalakshmi Reddy [1982] 131 ITR 415, which is a decision of the Madras High Court. In this case, the assessee, a housewife, permitted two commercial concerns to take water from the well in her plot of land. The parties paid for the well water. The assessees claim that the receipt was casual in nature and hence not taxable was rejected by the Income-tax Officer. However, the Appellate Assistant Commissioner and the Tribunal accepted the claim and held that the receipt was not taxable. The Tribunal found that the assessee had no previous business dealings to her credit and was a mere housewife. Even when she allowed water to be taken from her well she had no intention of charging for the water. In those circumstances, the Madras High Court held that the receipt cannot be treated as a business profit and that a fact of the utmost importance in this case was that the assessee was a married woman who was intent upon building a family residence and running her family in it and who had no thought of running business of any kind on her own, and so it was held that the receipt was a casual and non-recurring receipt and hence not taxable.
It has been held in the case of Sewal Singh Ajit Singh v. CIT [1980] 126 ITR 732, which is a decision of the Punjab and Haryana High Court, that the Nawab of Malerkotla transferred to the assessee a piece of land valued at Rs. 16,000. The Income-tax Officer fixed the value of the land at Rs. 20,000 and treated the same as the assessees income on the ground that the land had been conveyed by the Nawab in token of service rendered by the assessee in his capacity as a general attorney for the purpose of selling the lands belonging to the Nawab. In those circumstances, it was held by the Punjab and Haryana High Court that the contents of the deed of gift clearly mentioned that the assessee in his capacity as general attorney served the donor honestly and faithfully and it was because of the honesty and faithfulness that the donor developed true and natural love and affection towards the assessee and out of this love and affection he gifted the land to the assessee. It was also held that the mere fact that the assessee served the Nawab in the capacity of general attorney was no ground for holding that the transaction was not a gift. It was also held in this decision that there was no contractual or legal obligation on the part of the Nawab to pay any remuneration to the assessee and the assessee had no legal right to receive any remuneration and, therefore, the transaction was a gift and not a remuneration paid by the Nawab to the assessee for the services rendered by him as his general attorney.
It has also been held in the case of CIT v. Dr. B. M. Sundaravadanam [1984] 148 ITR 333 (Mad) that one K who was treated in 1958 by the respondent surgeon was completely cured of his ailment and a sum of Rs. 4,082 was paid by K to the respondent as and by way of professional charges. Subsequently, in 1960, K executed a deed of settlement by which he gifted an area of 33.38 acres of land specifically mentioning in the deed that the gift was made in order to show his feeling of gratitude to the doctor who had shown his kindness. The Income-tax Officer included a sum of Rs. 65,000 being the value of the lands gifted as income arising to the assessee out of his profession. In those circumstances, it was held by the Madras High Court that where a receipt is sought to be taxed as income, the burden lay on the Department to prove that it was within the taxing provision, and only where the character of the receipt is established as income, the burden of proof that it is not taxable lies on the assessee. It was also held in this decision that in view of the donor having already paid the assessee his professional charges as a doctor, there was no legal obligation on the part of the donor to make any further payment for the services rendered by the assessee and there was also no legal right in the assessee to receive any further payment for the professional services rendered earlier, and hence, it was not possible to hold that merely because the assessee was a medical practitioner, the gift received by him was towards the services rendered, and so it was held that the value of the lands gifted could not be included in the total income of the assessee as his professional income.
It has been held in the case of Rev Father Prior, Sacred Hearts Monastery v. ITO [1956] 30 ITR 451 (TC) that the donations received by a monastery for putting up a charitable institution and used for that purpose cannot be regarded as income and assessed to income-tax; they are of the nature of gifts and are capital receipts. It has also been held in this decision that assuming that such donations are of the nature of "income" and not capital receipts, they fall within section 5(3)(vii) of the Cochin Income-tax Act which exempts receipts, which are of a casual and non-recurring nature from the liability to assessment. It has also been held in this decision that the mere fact that certain donations have recurred in some years is not sufficient to characterise them as "recurring receipts". In order that a receipt may be a "recurring receipt", there must be a claim or right in the assessee to expect its recurrence, and that a voluntary gift depending entirely upon the goodwill of the donor does not, therefore, cease to be of a "casual and non-recurring nature" by reason merely of the fact that the gift is repeated.
Thus, it is evident that the assessees in the present case before us were paid pranamis as gifts by different persons and of varying amounts by the followers of the satsang out of reverence, love and affection for the two assessees as they were the widow and son of Shri Anukul Chandra Thakur, the Guru and founder of the satsang. Admittedly, the assessees were not doing any preaching work, rather both the assessees were employees of the satsang and they were getting salaries for the work they were doing. There was also no legal obligation on the disciples of satsang to make any gift to the two assessees and the gifts depended on the sweet will of the donors. Under such circumstances, it has to be held that the amounts in question are of a casual and non-recurring nature and they are not taxable. In fact Mr. B. P. Rajagarhia, on behalf of the Revenue, stated before us that the pranamis are being paid regularly to the two assessees once in a year. The fact that every year different persons are making payments of varying amounts once in a year, clearly goes to show that the amount can be said to be of a casual and non-recurring nature. They also depend on the good wishes of the donors and there is no legal obligation on the donors to pay gifts to the two assessees. Hence it has to be held that the pranamis receipts by the two assessees are not taxable income of the assessees.
Mr. L. N. Rastogi has also relied on Circular No. 158 F.No. 173/2/73-IT (A-l) dated December 27, 1974 [1975] 98 ITR (St.) 97 which was issued under section 10(3) of the Act. This circular lays down that the receipts which are of a casual and non-recurring nature will be liable to income-tax only if they can properly be characterised as "income" either in its general connotation or within the extended meaning given to the terms by the Income-tax Act and, hence, gifts of a purely personal nature will not be chargeable to income-tax, except when they can be regarded as an addition to the salary or when they arise from the exercise of a profession or vocation.
We have held in CIT v. Tata Robins Frazer Ltd., disposed of on the 21st of November, 1985 [1987] 163 ITR 886 reasons mentioned on pages 895 to 897 that the circulars which are issued under section 119 of the Act are binding on the Department and they have to be enforced. On this ground also, the assessees are bound to succeed as the gifts which are of a purely personal nature are held to be receipts of casual and non-recurring nature under section 10(3) of the Act.
Thus, it cannot be doubted that if the gifts had been made by the satsang to the two assesses who were the employees of the satsang, then the amounts could be taxable, but these gifts are purely of a personal nature which are being paid by the different disciples of the satsang in different years and of varying amounts and so the payments have to be held to be casual and non-recurring in nature.
In view of my discussions above, I hold that the Tribunal was correct in law in holding that the receipts of pranamis were casual and non-recurring and exempt under section 10(3) of the Act. The question is, accordingly, answered in the affirmative and in favour of the assessee and against the Revenue. However, in the peculiar circumstances of the case, the parties will bear their own costs.
S. K. JHA J. - I agree.