C.I.T. PATIALA vs. MR. JUSTICE KULDIP SINGH CHANDIGARH

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ITR/292/1995HC Punjab & HaryanaPHHC01032358199502 November 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages

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What did the High Court hold?

The High Court held that the Tribunal was right in law in holding that arrears of professional receipts are not taxable after the discontinuance of the legal profession, in light of Section 176(4) of the Income Tax Act, 1961. The Court stated that it was in respectful agreement with the view taken by the Calcutta High Court in CIT v. Justice RM Datta (supra). The revenue's counsel was unable to show any judgment taking a contrary view. Therefore, the question of law referred to the Court was answered against the revenue and in favour of the assessee. The reference was disposed of accordingly.

What were the facts?

The Commissioner of Income Tax (Revenue) has filed these Income Tax References (ITR Nos. 292 and 293 of 1995) before the High Court of Punjab and Haryana at Chandigarh. The references arise from an order dated 12.05.1993 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, in ITA Nos. 1534 and 1535/Chandi/1992. The assessment years in question are 1990-91 and 1991-92. The assessee, an advocate, claimed that arrears of professional receipts were not taxable after he was elevated to the Bench and discontinued his legal profession. The Assessing Officer and the CIT(A) rejected this claim, but the Tribunal accepted it.

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 after discontinuance of his legal profession, the arrears of professional receipts are not taxable under section 176(4) of the IT Act, 1961? Assessee's Contention: The assessee contended that professional receipts earned as an advocate were not taxable after the discontinuation of his legal profession due to his elevation to the Bench. The assessee relied on the judgment of the Calcutta High Court in CIT v. Justice RM Datta, (1989) 180 ITR 86. Revenue's Contention: The revenue's contention is not explicitly recorded in the judgment, other than their disagreement with the assessee's claim and the Tribunal's decision.

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 Nos.292 and 293 of 1995 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR Nos.292 and 293 of 1995 Date of decision:14.11.2006 The Commissioner of Income Tax, Patiala ....Petitioner versus Mr. Justice Kuldip Singh, 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 and Mr. Akshay Bhan, Advocates 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 12.5.1993 in ITA Nos. 1534 and 1535/Chandi/1992, for the assessment years 1990-91 and 1991-92:- “Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that after discontinuance of his legal profession, the arrears of professional receipts are not taxable under section 176 (4) of the IT Act, 1961?” The assessee claimed that professional receipt as advocate was not liable to be taxed after discontinuation of legal profession on elevation to the Bench. Reliance was placed on judgment of the Calcutta High Court

ITR Nos.292 and 293 of 1995 2 in CIT v. Justice RM Datta ,(1989)180 ITR 86. The Assessing Officer did not accept the claim, which view was upheld by the CIT(A). On further appeal, the Tribunal accepted the claim of the assessee having regard to provisions of Section 176(4) of the Income Tax Act, 1961 (for short, 'the Act'), as interpreted by the Calcutta High Court in Justice RM Datta's case (supra).

We have heard learned counsel for the parties and perused the findings recorded. Learned counsel for the revenue has not been able to show any judgment taking a view contrary to what has been taken in Justice RM Datta's case (supra). We are in respectful agreement with the view taken by the Calcutta High Court in Justice RM Dutta's case (supra). 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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