CIT CHANDIGARH vs. JUSTICE N.K.SODHI,36/4-A,CHD.

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ITR/16/1999HC Punjab & HaryanaPHHC01038598199914 November 2006Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal was right in law in holding that arrears of professional fees received after the discontinuance of the legal profession are not taxable under Section 176(4) of the Income Tax Act, 1961. The Court's reasoning was based on its decision in a related case, ITR Nos. 292 and 293 of 1995 (Commissioner of Income Tax, Patiala v. Mr. Justice Kuldip Singh, Chandigarh), which was decided on the same day. In that case, the question referred to the High Court was answered against the revenue and in favour of the assessee. Therefore, following that precedent, the present reference was also answered against the revenue and in favour of the assessee. The operative direction was to dispose of the reference accordingly.

What were the facts?

This case involves a reference to the High Court of Punjab and Haryana at Chandigarh concerning an Income Tax Appellate Tribunal (ITAT) order dated April 23, 1998, in ITA No. 118/Chandi/94 for the assessment year 1992-93. The revenue, Commissioner of Income Tax, Chandigarh, is the petitioner, and the respondent is Justice N.K. Sodhi. The ITAT had held that arrears of professional fees received after the discontinuance of a legal profession are not taxable under Section 176(4) of the Income Tax Act, 1961. The High Court noted that the ITAT followed its prior decision in the case of Justice Kuldip Singh v. ITO, which had been decided against the revenue.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that arrears of professional fees received after discontinuance of the legal profession are not taxable under section 176(4) of the Income Tax Act, 1961? Assessee's contentions: The judgment does not record any specific contentions made by the assessee before the High Court. However, the ITAT's decision, which the High Court upheld, implies the assessee argued that the fees were not taxable under the specified section. Revenue's contentions: The revenue, as the petitioner, is challenging the ITAT's order. The question of law framed indicates the revenue's position is that such arrears of professional fees are indeed taxable under Section 176(4) of the Income Tax Act, 1961, and the ITAT erred in holding otherwise. The revenue relied on the ITAT's own prior order in Justice Kuldip Singh v. ITO, which was decided against the revenue.

Which sections of the Income-tax Act were involved?

176(4)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

ITR No.16 of 1999 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No.16 of 1999 Date of decision:14.11.2006 Commissioner of income tax, Chandigarh ....Petitioner versus Justice N.K.Sodhi, Chandigarh ....Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present: Mr. SK Garg Narwana, Advocate, for the revenue. Mr. ML Garg, Advocate and Mr. Akshay Bhan, Advocate, for the respondent.

JUDGMENT: Following question of law has been referred for the opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, (for short, 'the Tribunal), arising out of its order dated 23.4.1998 in ITA No.118/Chandi/94, for the assessment year 1992-93:- “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that arrears of professional fees received after discontinuance of the legal profession are not taxable under section 176(4) of the Income Tax Act, 1961?” The Tribunal has followed its order in the case of Justice Kuldip Singh v. ITO, giving rise to ITR Nos.292 and 293 of 1995 (The Commissioner of Income Tax, Patiala v. Mr. Justice Kuldip Singh, Chandigarh), which has been decided by a separate order passed today,

ITR No.16 of 1999 2 wherein the question referred has been answered against the revenue and in favour of the assessee. In view of the above, the question referred is answered against the revenue and in favour of the assessee. Reference is disposed of accordingly. (Adarsh Kumar Goel) Judge November 14, 2006 (Rajesh Bindal) 'gs' Judge

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