COMMISSIONER OF INCOME TAX Vs. WAHAL J C

JUDGEMENT

(1.) AT the instance of the Revenue, the following question of law has been referred for our opinion:

(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 Appellate Tribunal, on further appeal by the assessee, reversed the decision of the Income-tax Officer and the Appellate Assistant Commissioner and held that the receipt of Rs. 25,000 by the assessee was clearly casual and non-recurring in nature and inasmuch as the same did not arise from any business or by the exercise of any profession or occupation, it was exempt from tax. THE Tribunal found that the assessee's principal source of income was commission received from various Birla concerns for the sale of the products mentioned above. He was not a share-broker, nor is he in the business of helping industries in the setting up of their factories. THEre was no stipulation or understanding between him and M/s. Universal Tyres Ltd. regarding the payment of this amount. THE amount was paid to him by M/s. Universal Tyres Ltd. ex gratia in recognition of his services rendered by assisting the former in the disposal of their shares as well as setting up their factory at Naini. In the result, the assessee's appeal was allowed. THEreupon, at the instance of the Commissioner of Income-tax, the Tribunal has referred the question quoted above for our opinion.