Law:

Section:

Section 2(24) of the Income-tax Act, 1961 - Income - Definition of - Assessment year 1981-82 - Whether embezzled amount can be treated as income within meaning of section 2(24) - Held, yes - Assessee had managed to embezzle cash belonging to his employer - ITO assessed embezzled amount as income of assessee - Whether one who uses property or money of others to secure gain, a profit therefrom may, even though he did it wrongfully and holds it, is to be subjected to income-tax to that extent - Held, yes - Whether since money embezzled is a gain to embezzler and falls within wider definition of 'income', it could be said that that embezzled amount was an income of assessee - Held, yes FACTS The assessee an employee of a firm embezzled money of said firm and utilized same in construction of house property. The ITO assessed embezzled amount as income of the assessee and brought same to tax. On appeal, the Commissioner (Appeals) as well as the Tribunal set aside the order of the ITO holding that all types of receipts cannot constitute income of an assessee. Capital receipts, loan receipts and receipts purely of windfall nature certainly do not constitute the income of the recipient. As the assessee acknowledged the liability in respect of the embezzled amount to his employer, the said amount formed merely a liability payable at a future date by him and could not constitute his income, inasmuch as, the embezzled amount could not be considered to be the business or professional income of the assessee, as the assessee had not been in the business or profession of embezzling money. On appeal by revenue : HELD By the definition 'income' in section 2(24) includes certain class of receipts. The 1961 Act emphasises it clearly that the meaning of 'income' does not restrict to the class of receipts mentioned in the definition but also includes in its ambit the meaning of all terms as generally understood. It is impossible to define exhaustively the meaning of 'income'; therefore, that the Legislature purposely kept the definition of 'income' as on inclusive definition. [Para 4] The word 'income' has to be construed in its widest amplitude. The question to be decided is as to…

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