Case: Mahesh Anantrai Pattani And Another Vs. The Commissioner Of Income-Tax, Bombay North, Ahmedabad

as gift". The word gift does not alter the nature of the payment. The Maharaja indeed made a gift, as he had stated over again; but this order quite clearly discloses that it was by way of remuneration for past services. The case, therefore, falls within the ruling of the Supreme Court reported in 1959 Supp (1) SCR 133 : (AIR 1959 SC 75 ) and is indistinguishable from it. In the earlier case of this Court, the person who gave the money did not even mention any past services; but this Court found, that because the recipient had taught him Vedanta philosophy, the payment was really in the nature of remuneration for past services.21. The facts in P. Krishna Menons case, 1959 Supp (1) SCR 133 : (AIR 1959 SC 75 ) were that the assessee was teaching his disciples Vedanta philosophy without any motive or intention of making a profit out of such activity. One J. H. Levy who used to go to Travancore from England at intervals attended his teachings. Levy had an account with Lloyds Bank at Bombay, and on December 31, 1944, Levy transferred the entire amount of Rs. 2,41,103-11-3 to the credit of an account which Levy got the assessee to open in his own name. Levy made further remittances and by August 19, 1951, had paid about Rs. 4,50,000. It was held by this Court that the assessee was carrying on a vocation. In deciding the question whether the amounts were assessable to tax, this Court observed as follows :-".... it seems to us that the present case is too plain to require any authority. The only point is, whether the moneys were received by the appellant by virtue of his vocation. Mr. Sastri contended that the facts showed that the payments were purely personal gifts. He drew our attention to the affidavit of Levy where it is stated all sums of money paid into his account by me have been gifts to mark my esteem and affection for him and for no other reason. But Levy also there said I have had the benefit of his teachings on Vedanta. It is important to remember however that the point is not what the donor thought he was doing but why the donee received it".Sarkar, J. then referred to the dictum of Collins, M. R. in Herbert v. McQuade, (1902) 2 KB 631 which may be quoted here :"Now that judgment, whether or not the particular facts justified it, is certainly an affirmation of a principle of law that a payment may be liable to income-tax although it is voluntary on the part of the persons who made it, and that the test is whether, from the standpoint of the person who receives it, it accrues to him in virtue of his office; if it does, it does not matter whether it was voluntary or whether it was compulsory on the part of the persons who paid it. That seems to me to be the test; and if we once get to this -- that the money has come to or accrued to a person by virtue of his office - it seems to me that the liability to income-tax is not negatived merely by reason of the fact that there was no legal obligation on the part of the persons who contributed the money to pay it."The learned Judge also referred to the observations of Rowlatt, J. in (1926) 1 KB 588 and of Viscount Cave, L. C. in Seymour v. Reed, (1927) AC 554 and observed that the real question was, is the payment in the nature of a personal gift or is it a remuneration?, and quoted as the reply the words of the Lord Chancellor - "If the latter, it is subject to the tax; if the former, it is not." Sarkar, J. also referred to the observations of Lord Ashbourne in Blakiston v. Cooper, 1909 AC 104 which were :"It was suggested that the offerings were made as personal gifts to the Vicar as marks of esteem and respect. Such reasons no doubt played their part in obtaining and increasing the amount of the offerings, but I cannot doubt that they were given to the vicar as vicar and that they formed part of the profits accruing by reason of his office.",and concluded as follows :"We have no doubt in this case that the imparting of the teaching was the causa causans of the making of the gift; it was not merely a causa sine qua non. The payments were repeated and came with the same regularity as Levys visits to the appellant for receiving instructions in Vedanta. We do not feel impressed by Mr. Sastris contention that the first payment of Rs. 2,41,103-11-3 was too large a sum to be paid as consideration. In any case, we are not concerned in this case with that payment. We are concerned with payments which are of much smaller amounts and as to which it has not been said that they were too large to be a consideration for the teaching. And one must not forget that these are cases of voluntary payments and the question of the appraisement of the value of the teaching received in terms of money is not very material. If the first payment was too big to have been paid for the teaching received, it was too big to have been given purely by way of gift."22. In my opinion, the case of this Court concludes the matter, and the Tribunal was within its rights in accepting one piece of evidence in preference to another, and the finding on the evidentiary value of the letter of the Maharaja was a matter essentially for the Tribunal to decide finally. I thus agree with the High Court in the answer which it gave, in agreement on facts with the Tribunal, and the reasons for which the answer was given.23. I would, therefore, dismiss the appeal with costs.24. Order:

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]There is no mention in the document of December 1950 of any services rendered to the Maharaja and it does not seem to have been considered by the Tribunal as to why the Maharaja should make out of his personal account the gift of such a large amount for something which was not done for the Maharaja specifically, particularly when services to the State and to the Maharaja and his family had already been well compensated. This lends support to the submission of the appellants that the amount was paid merely as a gift in token of Maharajas affection and regard for the assessee.In our opinion the sum of Rs. 5,00,000/- was not paid to the assessee in token of appreciation for the services rendered as a Dewan of Bhavnagar State but as a personal gift for the personal qualities of the assessee and as a token of personal esteem.17. The appeal is therefore allowed and the order of the High Court set aside and the reference is answered against the Commissioner of Income-tax. The appellants will have their costs throughout.