CA Babit Khurana (learning is my passion) (338 Points)
25 April 2010Suppose an judge adopt cash basis system for taxation puropse, he discontinous his profession from 1-4-2009 and recived fee of RS 10Lacs on 25-07-2009, which is due in 2008-09 but not taxed because of cash basis of accounting.
Q1 Now under which head this income is taxable???
Pl give reference to your answer.
Thanx in advance
Ritasha
(chartered accountant)
(356 Points)
Replied 25 April 2010
This income will be taxable under PGBP as it pertains to profession.It is not relevant here that profession is discontinued.
vishnupriya
(CA Final)
(1418 Points)
Replied 25 April 2010
Hi
In Justice Deoki Nandan Agarwala vs Union of India, 237ITR872(SC), the Supreme Court held that what the Judges receive is salary and such salary is taxable as income under the head salaries. The court held that even though the judges have no employer, they are constitutional functionaries and their income is taxable in the same manner as the salary of any other citizen.
If the assessee receives fee in capacity of advocate/lawyer/prosecutor he is assessable under business or profession.
please note difference between judge & prosecutor.
CA Babit Khurana
(learning is my passion)
(338 Points)
Replied 25 April 2010
Max Payne
(employed)
(2574 Points)
Replied 26 April 2010
Hi
As per Calcutta HC decision in case of Justice R M Dutta,
this is covered by 176(4).
It is not taxable since 176(4) does not say under which head the income is taxable, hence the fiction created by sec 176(4) fails.
Also upheld in the case of Kuldip singh vs ITO 1993
Amir
(Learner)
(4016 Points)
Replied 26 April 2010
G.K. Bhai,
Good post...........!
Bhai, I have a doubt, Can u pls help me understand the words in Pink - Below is Sec 176(4) -
Where any profession is discontinued in any year on account of the cessation of the profession by, or the retirement or death of, the person carrying on the profession, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the aforesaid person had it been received before such discontinuance.
I think the words in Pink indicates that Income shall be chargeable under same Head as it would have been b4 such discontinuance....???
Max Payne
(employed)
(2574 Points)
Replied 27 April 2010
Amir bhai
Thanks for showing interest in this post....
Where any profession is discontinued in any year on account of the cessation of the profession by, or the retirement or death of, the person carrying on the profession, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the aforesaid person had it been received before such discontinuance.
Bhai, i agree with you to an extent that it should be treated as PGBP, cos there was some SC decision as well that the necessary words should be added with the act by the courts to give effect to the fiction created,
but also there are so many cases that a fiction should not be stretched beyond what is expressly stated by lawmaker.
If we see the underlined words, the act does not say under which head the income is chargeable, it only says that "it is an income of the recipient chargeable to tax" in the year of receipt. It does not say it is includible in the total income as the business income, or IFOS. We can anyway ignore the capital receipt aspect because it is expressly taxable under this section.
Sec 28 also covers only the business which is carried on during the year. Sec 41 also does not cover this receipt.
The deductions will vary depending on IFOS or PGBP.... hence the stand off i guess..
I am not assigning meanings bhai....
As far as assigning meaning is concerned bhai, we can sum it up in a funny way...
"Lawmakers propose, Courts dispose." [Disposed] 
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