C.I.T HRY. vs. SP GUPTA

ITR/167/1989HC Punjab & HaryanaPHHC01022539198924 October 2006Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL2 pages
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What did the High Court hold?

The High Court held that the questions referred had already been addressed in a previous judgment by the same court in the case of Commissioner of Income Tax, Rohtak Vs. Dr. Usha Verma, Rohtak, ITR No.47 of 1985, decided on 21.11.2001. In that judgment, the questions were answered in favour of the revenue and against the assessee. Therefore, applying the precedent, the High Court answered the referred questions in favour of the revenue and against the assessee. The specific reasoning from the Dr. Usha Verma case is not detailed in this judgment, but it established the principle that income from a paying clinic should not be taxed as salary and that the relationship was not one of employer-employee in similar circumstances, which is contrary to the Tribunal's findings in the present case. The operative direction is to answer the questions as per the precedent.

What were the facts?

This case involves a reference to the High Court of Punjab and Haryana at Chandigarh concerning Income Tax Reference (ITR) No. 167 of 1989. The petitioner is the Commissioner of Income Tax, Rohtak, and the respondent is Dr. S.P. Gupta. The Income Tax Appellate Tribunal, Delhi Bench 'E', had passed an order dated 6.11.1980 in I.T.A.No.927 (Chd.)/79 for the assessment year 1976-77. The High Court was asked to provide its opinion on two questions of law referred by the Tribunal. The revenue was represented by Mr. Yogesh Putney, Advocate.

What were the issues?

The Tribunal referred the following questions of law for the opinion of the High Court: 1. Whether on the facts and in the circumstance of the case, the Tribunal was right in law in holding that the income from Paying Clinic should be taxed under the head 'profits or gains of profession', and not under the head 'salary'? (Question of law) 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that there was no relationship of employee and employer, when the assessee worked in the paying clinic run by the Government? (Question of law) Contentions: Assessee: The judgment does not record any contentions made by the assessee. Revenue: The judgment does not explicitly record the revenue's contentions but implies they are in opposition to the Tribunal's findings, as the questions are framed to challenge the Tribunal's decision. The revenue's stance is implicitly that the income should be taxed as salary and that an employer-employee relationship existed.

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Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.R No.167 of 1989 Date of decision:24.10.2006 Commissioner of Income Tax, Rohtak ...Petitioner Versus Dr.S.P.Gupta ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE RAJESH BINDAL Present: Mr.Yogesh Putney, Advocate for the revenue. ****

JUDGMENT Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Delhi Bench “E”

Delhi arising out of its order dated 6.11.1980 passed in I.T.A.No.927 (Chd.)/79 , in respect of the assessment year 1976-77. “i) Whether on the facts and in the circumstance of the case, the Tribunal was right in law in holding that the income from Paying Clinic should be taxed under the head 'profits or gains of profession', and not under the head 'salary'?” ii) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that there was no relationship of employee and employer, when the assessee worked in the paying clinic run by the Government? The questions have already been gone into by this Court in the judgment rendered in Commissioner of Income Tax, Rohtak Vs. Dr. Usha

The order continues below.

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