The revenue claims to be aggrieved by the impugned order dated 28.6.2013 = 2013-TIOL-703-ITAT-DEL of the ITAT whereby it rejected the revenue's appeal. It is urged that the Tribunal fell into error in its consideration of Section 176(4) of the Income Tax Act, and holding that a sum of Rs.67,86,669/- reported by the assessee in AY 2009-10 would not be subjected to tax. The facts necessary for deciding the appeal are that the respondent was a practising lawyer and was elevated as Judge of this Court on 11.4.2008. For the relevant year, a return was filed on 29.9.2009 declaring the income at Rs.10,74,474. The AO was of the opinion that the exemption of Rs.67,10,362/- claimed by the assessee was not justified in view of section 176(4) and sought to add it to the income as ?income from profession?. The assessee relying upon previous rulings of different High Courts as well as two judgments of this Court appealed to the Commissioner (Appeals) who accepted the appeal. Claiming to be aggrieved the revenue appealed to the ITAT, but without success. Revenue contends that the text and intention of section 176(4) is to bring to tax amounts received by an assessee from profession after discontinuance, given the deeming fiction under that section.
2. The CIT(Appeals) as well as the Tribunal took note of the contentions of the revenue and also of the previous decisions of various High Courts such as the decision of the Calcutta High Court reported as Commissioner of Income Tax V. Justice R. M. Datta [1989] 180 ITR 86 and that of the Punjab and Haryana High Court CIT V. Justice N.K. Sodhi decided on 14.11.2006 and another judgment of the Punjab and Haryana High Court reported as Commissioner of Justice Kuldip Singh v. Income Tax Officer (ITR No. 292 and 293 of 1995) decided on 14.11.2006. The Tribunal also noted the orders of the Calcutta, Delhi and Chandigarh and Hyderabad Benches to say that even though section 176 sought to deem that the assessee carried on profession in the year in which amounts were received, nevertheless in the absence of any further indication in the statute to locate the amount within any head of income under section 14, ruled out the incidence of taxation in that regard. The relevant part of the Tribunal?s reasoning is as follows :
"11. However, Section 4 of the Act, which provides for the charge of Income Tax, lays down in its sub-section (1), that income tax shall be charged 'in accordance with and subject to the provisions of this Act in respect of the total income of the previous year.' So, income tax has been provided by Section 4 (1) to be chargeable subject to the provisions of the Income Tax Act, 1961. Now, Section 14 of the Act mandates that for the purposes of charge of income tax, all income shall be classified under the five heads delineated therein, if not provided otherwise by the Act. And if a particular income according to its nature and quality falls under any head, its computation should be made in accordance with the directions contained in the group of sections relating to that head, that head only, and in accordance with no other head. This is what is the purport of Section 4, the charging section, when it makes it mandatory for charge of income tax in accordance with and subject to the provisions of the Income Tax Act, 1961, as noted above.
12. Now, it is trite law that where the language employed in a Section is clear, nothing other than the words used are to be read, permitting of nothing else to be read into the Section. This is more so in the case of a charging provision contained in a taxing statute, as is the case with Section 176 (4) of the IT Act, 1961. As considered in 'CIT vs. Justice R.M. Datta' (supra), in such a case, the rule of construction adopted by Rowlett J. in 'Cape Brandy Syndicate v. IRC', (1921) 1 KB 64 would be properly applied, as per which rule, in a taxing Act, one has to look merely at what is clearly said, nothing is to be read in, nothing is to be implied, there being no room for any intendment, one can only look fairly at the language used.
13. And as considered in CIT vs. Ajax Products Ltd., 55 ITR 741 (SC) = 2002-TIOL-132-SC-IT-LB, the subject is not to be taxed unless the charging provision clearly imposes the obligation and it is also the rule of construction that if the words of a statute are precise and unambiguous, they must be accepted as declaring the express intention of the legislature. Now, it has been elaborately considered in 'Justice R.M. Datta' (supra), that the word 'accordingly' in Section 176 (4) of the Act cannot be considered as indicative of the head of charge, i.e., that the income should be deemed to be the income falling under the head "Profits and gains of Business, Profession or Vocation", even in a case where the profession is not carried on during any part of the relevant previous year. It has also been considered therein that Section 176 (4) of the Act introduces a legal fiction, which should be limited only to the purpose for which it has been created. Section 176 (4), then, by virtue of the fiction contained therein, merely treats the receipt as the income of the recipient. In the absence of any further fiction in the Section, the character of such receipt cannot be determined and no further fiction can be introduced so as to determine the head of charge under which such receipt would be made to fall. Thus, the express language of Section 176 (4) does not render the receipt to be treated as income chargeable under the head "Profits and Gains of Business, Profession or Vocation." Now, the receipt in question cannot be brought to tax as income from Profits and Gains of Profession, as above, under the computation provisions contained in Sections 28 to 44-DB of the Act and if that be so, the receipts would not be included in the total income, as defined in Section 2 (45) of the Act (i.e., the total amount of income referred to in Section 5, computed in the manner laid down in the Act), for the purpose of chargeability. Therefore, as held in 'Justice R.M. Datta' (supra), even in spite of introduction of Section 176 (4) in the Act, the receipts in question cannot be treated as the assessee's income falling under the head "Profits and Gains of Business, Profession or Vocation", even though they were, being the fruits of the assessee's professional activities, the profits and gains of a profession, under the very same head of "Profits and Gains of Business, Profession or Vocation." It is due to the absence of any legislative provision that these receipts cannot be treated as business income falling under the head "Profits and Gains of Business, Profession or Vocation" carried on by the assessee during the relevant year. They cannot be included in the total income of the assessee, even though the amount was received by the assessee before the discontinuance of his profession due to his elevation as High Court Judge.
14. In 'Nalinikant Ambalal Mody vs. SAL Narayan Rao' (supra) [as considered in 'Justice R.M. Datta' (supra)], when there is a case to which the computation provisions pertaining to a charging Section cannot apply at all, as in the present case, it is evident that such a case was not intended to fall within the charging Section, lest a conclusion be arrived at, that while a certain income seems to fall within the charging Section, there is no scheme of computation for quantifying it, which conclusion is not the legislative intent. In 'Justice R.M. Datta' (supra), their Lordships held that in view of this ratio in 'Nalinikant Ambalal Mody' (supra), despite the insertion of Section 176 (4) in the Act, since the assessee did not carry on any profession in the relevant previous year, the receipt cannot be taxed u/s 28 of the Act, since Section 176 (4) does not contain any deeming provision treating such receipt as income falling under the head "Profits and Gains of Business, Profession or Vocation" and also, it cannot be taxed as income from other sources u/s 56 of the Act.?
3. This Court is of the opinion that having regard to the previous rulings, judgments of this Court and the reasoning adopted and with the omission to carry forward things to bring to tax such amounts by indicating the relevant head of income under section 14, the question is fairly well-settled. This is also in accord with the ruling of the Supreme Court in CIT v. Ajax Products Ltd. 55 ITR 741 (SC) = 2002-TIOL-132-SC-IT-LB that the subject is not to be taxed unless the charging provision clearly says so. This view has been followed by the Tribunal in this case.
We are further of the opinion that the view expressed by the Tribunal is in conformity with the opinion of several High Courts and its own Benches in different States; furthermore, the revenue itself has not thought it appropriate to carry the matter in appeal to the Supreme Court, thus accepting the ruling. The court is also of the opinion that the Tribunal?s reasoning does not call for any interference. In this view of the matter no substantial question of law arises.
The appeal is accordingly dismissed.
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