COMMISSIONER OF INCOME TAX Vs. GOVINDASWAMINATHAN

JUDGEMENT

(1.) THE assessee was an Advocate-General of the State of Tamil Nadu. THE assessee is a 'Barrister and he was appointed as Advocate-General in the State of Tamil Nadu in G. O. Ms. No. 1285, Public (General-F) dated July 9, 1969. THE standing order relating to the Advocate-General had been revised and the terms and conditions for his tenure as Advocate-General are found in the appendix to the G. O. Ms. No. 262, dated February 1, 1955. It is stated that the Advocate-General is the principal law officer and legal adviser to the Government and his appointment is made under article 165 of the Constitution of India to hold the office during the pleasure of the Governor. THE Advocate-General is debarred from advising or holding briefs against the Government, defending accused persons and giving advice to private parties in which he is likely to be called on to advise the Government. THE assessee was paid a monthly salary of Rs. 1,500 and he was also paid fees for his appearance on behalf of the Government in various courts of law. THE question in the tax case reference pertains to the head of income under which the monthly salary is to be taxed, and there is no dispute that the professional fees were taxed under the head "Income from business and profession". THE Income-tax Officer for the assessment years 1971-72, 1972-73, 1976-77 and 1977-78 held that the salary paid by the Government of Tamil Nadu was only a "retainer fee" to retain the services of the assessee as an Advocate-General of the State and the same should be considered under the head "Income from business and profession". He accordingly added the salary with other professional fees of the assessee for all the assessment years and completed the assessment. THE effect of treating the salary as professional income was that the standard deduction available under Section 16(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), was not granted in respect of the salary income.

(2.) THE assessee preferred appeals to the Commissioner of Income-tax (Appeals) who found that the salary was paid every month in respect of the office held by him during the pleasure of the Governor and the salary was to be assessed under the head "Salary" and, consequently, the assessee was entitled to deduction under Section 16(1) of the Act in respect of the salary received. THE Revenue carried the matter in appeal before the Income-tax Appellate Tribunal. THE Tribunal held that the remuneration paid for holding the post of the Advocate-General has been described as salary and the fees were paid for actual appearance in the courts of law in exercise of the profession carried on by him. THE Tribunal held that the amount paid as "salary" should be treated as salary for the purpose of assessment under Section 16 of the Act. THE Tribunal also held that the salaries paid to the Judges, Accountant-General, Governors, Vice-President of India, who held constitutional posts, have been assessed under the head "Salary" only and there is no reason to depart from the accepted assessment of income of the Advocate-General as salary in the case of remuneration paid for holding the post. THE Tribunal, in this view of the matter, dismissed the appeal preferred by the Revenue.

(3.) MR. P. P. S. Janarthana Raja, learned counsel for the assessee, has not seriously disputed the position that the relationship of the Advocate-General with the State is purely a relationship of an advocate and a client, but the contention of learned counsel for the assessee is that the amount was paid to him for holding the post and it is also described in the Government Order as salary. However, we are unable to accept the contention of learned counsel for the assessee. We have seen that there is no employer-employee relationship between the State Government and the assessee and the relationship between the assessee and the State Government is purely that of an advocate and a client.