COMMISSIONER OF INCOME-TAX Vs. J C WAHAL

JUDGEMENT

(1.) At the instance of the Revenue, the following question of law has been referred for our opinion: "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the commission of Rs. 25,000 received by the assessee on sale of shares of M/s. Universal Tyres Co. was exempt from tax under Section 10(3) of the Income-tax Act, 1961 ?"

(2.) The assessee is an individual and the proceedings relate to the assessment year 1970-71. The assessee enjoys income from commission on the sale of products like cycle, linoleum, jute-matting, etc., manufactured by various Birla concerns. During the relevant previous year, he was paid a sum of Rs. 25,000 by Universal Tyres Ltd. Under a revised return, he asserted that this amount was exempt from tax under Section 10(3) of the Income-tax Act, 1961, claiming the same as a receipt which was of a casual and non-recurring nature not falling under any of the provisos to Section 10(3). In the alternative, it was claimed that in case the said receipt was treated as assessable income, he was entitled to a deduction of 25 per cent. therefrom as expenses incurred by him in helping M/s. Universal Tyres Ltd.--also a Birla concern--in the sale of its shares and in the setting up of a factory owned by that company at Naini.

(3.) The Income-tax Officer negatived the assessee's claim for exemption of the said receipt of Rs. 25,000 from tax holding that the amount paid to the assessee by M/s. Universal Tyres Ltd., for helping it in the sale of its shares formed part and parcel of the assessee's normal and regular business and hence liable to be taxed. The Income-tax Officer, however, allowed a deduction of ten per cent. instead of 25 per cent. claimed by the assessee from that receipt as expenses. In this way, the Income-tax Officer made an addition of Rs. 22,500 to the assessee's income.