Satish Chandra, J. - (1.) THE Income-tax Appellate Tribunal, Allahabad Bench, has referred the following question for the opinion of this court: " Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that payment at the rate of 10% received as clerkage by the assessee as a result of contract between him and the client as a senior advocate on the Rolls of the Bar Council did not form part of his income ?"
(2.) THE question relates to the assessment year 1969-70. THE assessee is practising as a senior advocate, generally before this court. He returned gross professional income at Rs. 80,745. He claimed that 10% of this amount, namely, Rs. 8,074.50, was received in addition by him for being paid as clerkage to his clerical establishment and was not assessable as his income. THE Income-tax Officer held that the clerkage is received by the assessee and then paid to the clerks and so it was not a case of diversion at source but appropriation only. THE Income-tax Officer found that out of the sum of Rs. 8,074.50 a sum of Rs. 3,600 was paid by the assessee to his daughter-in-law on the footing that she assisted him in his professional work. This was held not to be permissible deduction. THE balance of Rs. 4,474 was allowed as a valid deduction. The assessee went up in appeal. The Appellate Assistant Commissioner held that the clerkage was never received as a part of the income of the assessee. It was an amount payable to the staff who assisted him in the professional work. As the same does not form part of the total income of the assessee the question of considering deductibility of the same from the professional receipts does not arise. He disallowed the addition of Rs. 3,600. The Income-tax Officer went up in appeal to the Tribunal. The Tribunal upheld the finding that the receipt of Rs. 8,074.50 did not form part of the income of the assessee. The Tribunal also went into the question of the genuineness of the payment made to the daughter-in-law and held that she did assist the assessee in his professional work and the payment of Rs. 3,600 was justified, for the services rendered by her in his professional work.
(3.) AT the instance of the Commissioner of Income-tax the Tribunal has referred the question of law mentioned above for the opinion of this court. The question referred by the Tribunal does not relate to the finding with regard to the justifiability of the disputed deduction. The Commissioner of Income-tax has filed the connected application under Section 256(2) of the Income-tax Act, 1961, praying that seven additional questions may be required to be referred to this court. AT the hearing, learned counsel appearing for the Commissioner confined his submission to questions Nos. 6 and 7 mentioned in the application. These two questions relate to the finding that the daughter-in-law rendered services to the assessee in his professional work and, therefore, the payment was justified. These questions would arise only if the other finding of the Tribunal upon which it has referred the question to us, namely, that the clerkage did not form part of the income of the assessee, is answered in favour of the department. Chapter XVI, Rule 24, of the rules of this court, provides that a sum calculated at the rate of 10% of the taxed fee of the advocate of a party shall, subject to a minimum of two rupees, be included in the taxation of costs on account of the fee of such advocate's clerk. The statutory provisions provide for taxation of clerk's fee at 10% of the fee paid to the advocate. Rule 25 requires the advocate, including the senior advocate, to file a fee certificate. In cases in which a senior advocate is appearing such certificate shall be accompanied by a voucher/receipt signed by the senior advocate for the fee paid to him. The rules do not require any certificate of payment of clerk's fee. But, nonetheless, the rules require taxation of clerkage. This shows that the rules of the court recognise a standing practice of the clerks receiving 10% of the sum paid to an advocate as his fee. The assessee claimed 10% of the fee paid to him as clerkage. This claim was accepted by the Assistant Commissioner of Income-tax and the Tribunal. We have no material before us to hold that this finding of fact was not based on sufficient material. It is obvious that on facts the receipt as clerkage is not part of the professional income of the assessee and so the question whether it was diversion at source owing to an overriding title or a case of appropriation of income does not arise for decision.;