COMMISSIONER OF INCOME TAX Vs. SORABJI DORABJI

JUDGEMENT

(1.) At the instance of the Revenue the Income Tax Appellate Tribunal has referred the following question of law for the decision of this Court:

(2.) The respondent is an assessee to Income tax. We are concerned with the assessment year 1978-79. A sum of Rs. 8,400/- was included in the assessable income of the assessee for the year 1978-79. The said sum represented salary paid to his wife, Mrs. Soonoo Sorabji, who was a director of the company M/s. Sorabji And Co. (P) Ltd. The respondent assessee has substantial interest in the company. The Income Tax Officer invoked the provisions of S.64(1)(ii) of the Income Tax Act. The assessee claimed that the income should not be included in view of the proviso to the said section. This plea was rejected. The Income Tax Officer took the view that the wife of the assessee, Mrs. Soonoo Sorabji, did not possess any technical or professional qualification. In the appeal tiled by the assessee, the Appellate Assistant Commissioner adverted to the fact that the lady has been a Director of the Company from the very inception in 1963 and she was actively engaged in the business of the company. He also held that she had acquired professional skill and qualification by virtue of her long experience as a director of the company and so, in the circumstances, the income of Rs. 8,400/- paid to her was attributable to the application of her professional knowledge and experience. In this view, he held that the salary paid to Smt. Soonoo Sorabji (Mrs. Sorabji Dorabji) was not includible in assessing the respondent. According to the Appellate Assistant Commissioner, in the line of business carried on by the assessee, namely, steamer agents and clearing and forwarding agents, there is no degree or diploma coarse available and so the long experience acquired by Smt. Soonoo Sorabji should be taken to be the technical or professional qualification acquired by experience. The Revenue filed an appeal before the Income Tax Appellate Tribunal. The Appellate Tribunal concurred with the Appellate Assistant Commissioner and held that the sum of Rs. 8,400/- would fall within the proviso of S.64(1)(ii) of the Income Tax Act. The Appellate Tribunal held:

(3.) We heard counsel for the Revenue Mr. N. R. K. Nair and counsel for the respondent Mr. Nagendran. It was contended that it cannot be said that Mrs. Sorabji Dorabji possessed technical or professional qualification and that the income is solely attributable to her technical or professional knowledge and experience within the meaning of the proviso to S.64(1)(ii) of the Income Tax Act. On the other hand, counsel for the assessee, Mr. Nagendran, submitted that considering the long experience of Mrs. Sorabji Dorabji, for well nigh over two decades, she should be held to have sufficient professional knowledge and experience and so the reasoning and conclusion of the Appellate Tribunal is justified in law.