RAMANUJAM J. - (1.) THE assessee is a prominent and eminent surgeon running a nursing home at Madras. One G. R. Kanagasabai Pillai of Kariamangalam in Tanjore District underwent treatment in the nursing home of the assessee during the period from November, 1957, to December, 1958, for a chronic ailment.
(2.) THE said Kanagasabai Pillai got completely cured and he had paid to the assessee a sum of Rs. 4, 082 as fees for the professional services rendered by him Kanagasabai Pillai owned about 300 acres of lands, both wet and dry. He had no issues. By a deed dated March 9, 1960, he gifted to the assessee 31.56 acres of manja lands and 1.82 acres of punja lands situate in Kariamangalam village specifically mentioning in the gift deed that the assessee had shown him kindness, infused in him self-confidence and gave him sense of protection which he could never forget, that the assessee's kindness and protection had created a feeling of gratitude in his mind and to translate it into concrete shape, he was making the gift of the lands to the assessee. THE gift deed specifically provided that the assessee should not sell the lands gifted to him without obtaining the permission of the donor.Coming to know of this gift deed, the ITO reopened the assessment of the assessee for the assessment year 1960-61 under s. 147(a) of the I.T. Act, 1961, hereinafter referred to as "the Act". The assessee objected to the value of the lands gifted being treated as taxable income, his contention being that the gift had been made to him by Kanagasabai Pillai not as remuneration for the professional services rendered by him but only in appreciation of his personal qualities. The ITO did not accept the assessee's contention but proceeded to hold that the gift was made by the donor in consideration of the professional services rendered by the assessee as doctor and, therefore, the receipt was definitely not of a casual and non recurring nature. He determined the value of the lands gifted at Rs. 65, 000 which was taken as chargeable to taxAggrieved by such assessment, the assessee preferred an appeal to the AAC contending, (1) that the reopening of the assessment under s. 147(a) is illegal, and (2) that the gift of lands having been made in appreciation of his personal qualities, it is only a casual and non-recurring income not arising out of the profession carried on by him, and, therefore, the same is not chargeable to tax. The AAC rejected the first contention but accepted the second, with the result the sum of Rs. 65, 000 which was taken as income from profession was deleted from assessment.Aggrieved by the said decision, the Revenue preferred an appeal to the Income-tax Appellate Tribunal. In the appeal the Revenue did not dispute that the receipt by the assessee was only a casual and non-recurring receipt but it mainly contended that it was for the assessee to show that the receipt in question did not arise from the exercise of his profession and that he had not done so. The assessee on the other hand contended before the Tribunal that the gift in question was made for his personal qualities and consequently it could not be said to be connected with the services rendered by the assessee. Thus, the main question before the Tribunal was whether Kanagasabai Pillai had gifted the lands in question to the assessee in appreciation of the latter's personal qualities or as a remuneration for the professional services rendered. The Tribunal took the view that, on the facts and circumstances of the case, it was for the Department to establish that the receipt in question was taxable income and proceeded to hold, after consideration of the recitals in the gift deed and the oral statements made by the donor and the assessee before the ITO and other circumstances such as payment of Rs. 4, 082 by the donor to the assessee as remuneration for the services rendered, that the gift of the lands in question having been made two years after the donor got discharged from the nursing home, it cannot be taken to be payment for the professional services rendered by the assessee and that there being no evidence that the services rendered by the assessee to the donor were of such a nature as to merit a remuneration of Rs. 65, 000, the gift should be taken to have been made only in appreciation of the assessee's personal qualities and not as remuneration for the services rendered. In this view, the Tribunal dismissed the appeal filed by the RevenueAggrieved by the decision of the Tribunal, the Revenue has obtained a reference to this court on the following question of law"Whether, on the facts and in the circumstances of the case, the sum of Rs. 65, 000 covered by the settlement is chargeable to tax as professional income in the hands of the assessee as a doctor ?" *From the facts referred to above, it could be seen that the assessee treated Kanagasabai Pillai during the period from November, 1957, to December, 1958, in his nursing home at Madras and Kanagasabai Pillai got completely cured of his illness. For the professional services rendered by the assessee, there was admittedly a payment of Rs. 4, 082 then and there. It is not the case of the Revenue that after payment of Rs. 4, 082 any further amount was outstanding towards the assessee's fees for the professional services rendered by him, and that as the amount remained unpaid till March 9, 1960, the gift deed was executed. When Kanagasabai Pillai had paid admittedly a sum of Rs. 4, 082 as and for fees for the professional services rendered by the assessee, the gift in question was made by the donor not in discharge of his liability to pay the fees for the assessee's professional services. It is significant to note, as pointed out by the Tribunal, that the professional services rendered by the assessee has not been shown by the Revenue to be of such a nature as to merit a remuneration of Rs. 65, 000 plus Rs. 4, 082, which has already been paid as fees. From the order of the Tribunal it is seen that the Revenue did not dispute before it that the receipt by the assessee was only a casual and non-recurring receipt. Therefore, we have to proceed on the basis that the receipt of gift of the value of Rs. 65, 000 by the assessee was a casual and nonrecurring receiptBefore us the contention of the Revenue is that the onus is on the assessee to show that the receipt of Rs. 65, 000 is not a taxable receipt and that, in this case, the assessee has not discharged the said onus. In support of the said contention, reliance is placed on the decision of the Supreme Court in P. Krishna Menon v. CIT and of the Calcutta High Court in Amarendra Nath Chakraborty v. CIT.
(3.) THE assessee on the other hand contends that once it is shown that the gift made by the donor is shown to be in appreciation of the assessee's personal qualities, then it cannot be said to be connected with the professional services rendered by the assessee and as such the receipt cannot be taken to be a taxable receipt and it was for the Revenue to establish the contrary. For this purpose, reliance is placed by the assessee on the decisions of the Supreme Court in Mahesh Anantrai Pattani v. CIT and Parimisetti Seetharamamma v. CIT.In P. Krishna Menon v. CIT, one K, after his retirement, from Government service 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 K resided and stayed there for a few months at a time and attended K's discourses and also 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 K opened at the same bank at Bombay. THEreafter, from time to time, L put in further sums into K's account in Bombay. The question was whether the receipts from L constitute K's income taxable under the Travancore Cochin I.T. Act, 1121, which was identical to the Indian I.T. Act, 1922. The Supreme Court considered the said question as comprising two aspects, (1) whether K was carrying on an avocation, and (2) whether the amounts in question can be treated as profits and gains of the said avocation. On the first aspect, the Supreme Court held that the word "avocation" would take in the activity of K in teaching Vedanta in a regular and organised manner. On the second aspect, it took the view, after considering a large number of authorities, both Indian and English, that the payments made by L were income arising from an avocation and they were not casual or non-recurring receipts and therefore, the payments are taxable. In that case the Supreme Court observed (p. 54) "It is well established that in cases of this kind the real question is, as Rowlatt J., put it in Reed v. Seymour 1926 (1) KB 588 (KB): 'but is it in the nature of a personal gift or is it a remuneration ? ', an observation which was quoted with approval by Viscount Cave L.C., when the case went up to the House of Lords with the addition, 'If the latter, it is subject to tax if the former it is not' : see Seymour v. Reed 1927 AC 554. We find it impossible to hold in this case that the payments to the appellant had not been made in consideration of the teaching imparted by him ...... We have no doubt in this case that the imparting of the teaching was the causa causans of the making of the gift it was not merely causa sine qua non. The payments were repeated and came with the same regularity as Levy's visits to the appellant for receiving instructions in Vedanta." *In Amarendra Nath Chakraborty v. CIT, the assessee was a preacher of the Satsang cult and for his work as a preacher he received salary from the institution. While working as a preacher be initiated disciples into the satsang and received offerings from such disciples. One of the disciples executed a deed of gift relating to a piece of land in the town of Calcutta valued at Rs. 40, 000. The question arose as to whether the gift is traceable to the assessee's avocation as a preacher of the Satsang cult and as such a taxable receipt. The Calcutta High Court held that the gift was strictly traceable to the assessee's avocation of preacher of the Satsang cult and that the value of the gift of land was receipt by the assessee in the carrying on of the assessee's vocation as religious teacher and as such taxable in his hands. Relying on the said decisions the learned counsel for the Revenue contends that the gift in the present case is traceable only to the assessee's profession as a medical practitioner notwithstanding the fact that he has received the fees for his professional services rendered and that the gift can be traced only to his profession and cannot be treated as one in appreciation of his personal qualities outside his medical profession. ;