IN THE ITAT DELHI BENCH ‘C’

Income-tax Officer, Ward 19(1), New Delhi

v.

Sunil Mittal

Section 28(iv) of the Income-tax Act, 1961 - Business income - Value of any benefit or perquisite, arising from business or exercise of profession - Assessment year 2001-02 - Whether where assessee had rendered help to a person on various occasions, who in return had gifted certain sum to assessee, such gifted amount would fall outside scope of income within meaning of section 28(iv), as such benefit was not received in course of business of assessee - Held, yes

Facts

The assessee had received a gift of certain sum from a person. On being asked why he had been gifted such huge amount, the assessee produced the donor before the Assessing Officer wherein the donor stated that he had been helped by the assessee on several occasions and, in return of which, he had gifted certain sum to the assessee. The Assessing Officer, however, held that gift was received during course of assessee’s business and accordingly, treated same as income under section 28(iv). The Commissioner (Appeals) treated the gift as genuine and deleted the addition made by the Assessing Officer.

On revenue’s appeal :

Held

It was accepted fact that the addition was not made under section 68 as unexplained cash credit. It was also accepted that the identity and creditworthiness of the party were established and the transaction was genuine. The limited question was as to whether the amount was taxable under section 28(iv). As per section 28(iv), the value of any benefit or perquisite, whether convertible into money or not, arising from the business or the exercise of a profession, shall be treated as income chargeable to income-tax under the head ‘Profits and gains of business or profession’. It was to be noted that the amount was received by cheque and was not in any intangible form in the nature of benefit or perquisite. The amount was not received in that kind. Thus it could not be treated as benefit or perquisite. Secondly, the amount was not received by the assessee in the course of carrying on his own business. The assessee helped the donor on various occasions. Thus, it was not in the course of carrying on assessee’s business that any benefit or perquisite was received. Rather the donor was helped by the assessee and the gift was given. Thus, the same was outside the scope of income within the meaning of section 28(iv). Accordingly, the finding of the Assessing Officer was ill founded and the addition could not be made under section 28(iv). [Para 8]

The appeal was to be dismissed.