Law:

Section:

Section 10(3) of the income-tax act, 1961 - Casual or non-recurring income - Onetime payment received by assessee-company from world organisation as help to increase circulation of its magazine and to put it on more economical footing - ITO taxed it as business receipt - AAC treated it as casual and non-recurring - Tribunal upheld ITO's order - Whether Tribunal right in law - Held, on facts, no FACTS The assessee-company, under compulsory winding up proceedings, was publishing an English magazine. On 1-10-1962, it approached a world organisation for some financial assistance, inter alia, to improve the format and lay out of its magazine and also suggested to that organisation to create bulk subscriptions for the magazine. The organisation, by its letter, dated 17-10-1962, intimated its decision to donate Rs. 28,342 to enable the assessee to increase the circulation of its publication and to put it on a more stable and economical footing. The ITO treated this amount as taxable income for the assessment year 1963-64. The AAC held it as one of casual and non-recurring nature and not income. The Tribunal observed (i) that the assessee had approached the world organisation for financial assistance in the business and the organisation had given the money with the aforesaid objective; and (ii) that the said amount, though solitary in character, had been given as a result of its business activity and could not be said to be a donation without any consideration. The Tribunal, therefore, held that the said donation was a business receipt liable to tax. On reference: HELD 1. The receipt was "casual" in nature as it depended on the sweet will of the donor and its non-payment could not be enforced against him. It was clearly non-recurring because the payee had no right of expectation for its recurrence. This was the solitary approach made by the assessee and it was also the solitary receipt of this nature. 2. The letter of the organisation made it clear that the payment was purely a donation to the assessee. No services were rendered by the assessee, nor was there any mutual commercial arrangement between the assessee and the donor as to the terms for the provision of…

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