NALNIKANT AMBALAL MODY versus COMMISSIONER OF INCOME TAX, BOMBAY

Citation: [1966] SUPP. 1 S.C.R. 295 · Decided: 04-05-1966 · Supreme Court of India · Bench: A.K. SARKAR · Disposal: Appeal(s) allowed

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Judgment (excerpt)

·• 
A 
B 
0 
NALNIKANT AMBALAL KODY 
~ 
COMMISSIONER OF INCOME-TAX, BOMBAY 
May 4~ 1966 
295 
[A. K. SARKAR. C.J., J. R. MUDHOLKAR AND R. S. BACHAWAT, JJ.] 
Indian Income-tax Act 1922, ss. 46, 10, 12-0utstanding 
fees 
from legal profession received after cessatwn of practtce-cash sy.s-
tem of accounting-Recetpts whether can be taxed under s. J.2 
income from 'other sources'. 
The appellant an advocate who maintained his accounts on the 
cash system gave up practice when he was elevated to the Bench in 
1957. Certain outstandmg professional dues were however received 
by him in the accounting years 1958 and 1959. These receipts were 
shown by him as income in his return for the assessment years 
1959-60 and 1!160-61 and were assessed by the Income-tax Officer. The 
appellant then went in revision to the Commissioner of Income-tax 
contending that the said receipts were not income and had been 
wrong'.iy taxed. The Commissioner having decided against him the 
D 
appe!J.ant came to this Court under Art. 136 of the Constitution. 
B 
G 
B 
HELD: (i) The rec~ipts in the present case were clearly the 
fruits of the assessee's professional actlvity and fell under the 
fourth head of s. 6 of the Indian Income-tax Act 1922. They were 
however not chargeable to tax under that head because under the 
corresponding computing section that is. s. 10, an income received 
by the assessee who kept his accounts on the cash basis in an accoun~ 
ting year in which the profession had not been earned on at all is 
not chargeable. [297 D-F] 
Commissioner of Income Tax v. Express Newspapers Ltd., 53 
I.T.R. 250, relied on. 
(ii) The income could not be taxed under s. 12 either. Section 
12 deals with income which is not included under any other preced-
ing heads covered by ss. 7 to 10. If the income is so included, it falls 
outside s. 12. It follows that if, as in the present case, the income is 
profits and gains of profession it cannot come under s. 12. [301 E] 
The heads of income in s. 6 are mutually exclusive and it would 
bet:incorrect to say that as the receipts could not be brought to tax 
under the fourth head they could not fall under that head and must 
therefore fall under the residuary head 'other sources'. There is no 
justification for the assumption that an income falling under one 
head has to be put under another head if it escapes taxation under 
the computing section corresponding to the former head. [298 A; 
300 E-F] 
The character of the income cannot change merely because the 
assessee received it at a certain time or adopted a certain system of 
accounting. [301 B] 
Section 4 does not say that whatever is included in total in-
come must be brought to tax. The income has to be brought under 
one of the heads mentioned is s. 6 and can be charged to tax only 
if it is so chargeable under the computing section corresponding to 
LJS5SCI 
. 
8UPRBW:E OOURT REPORTS 
(1966] 8UPP. 8.C.R. 
that head. Income which falls under the fourth head can be brought 
A 
to tax only if it can be so dona under the rules of computation laid 
down in s. 10. l298 G-299 B] . 
In re: B. M. Kamdar, 14 I.T.R. ~0. not approved. 
The United Commercia[ Bank v. The Commissioner of Income 
Tax, [1958] S.C.R. 79, Suhsbu111 House Estate Ltd., v. FTy, 15 Tax 
Cases 266 and Commissioner of Income-tax v. 
Cocanada 
Pad~ 
~ami Bank Ltd., 57 l.T.R. 306. relied on. 
Probhat Chandra Barua v. King Emperor. a7 l.A. 228, distin· 
auished. 
Per Bachawat J. {dissentin.o)-
The receipts in question were chargeable under B. 12. 
B 
Any income chargeable under a specific head can be charged only 
C 
under that head, and no part of that income can be charged again 
under s. 12. But any part of the total income of the assessee not asse~ 
sable under a specific head is assessable under the residuary head 
:overed by s. 12. [305 C] 
The income in question was not exempt under s. 4(3). The receipts 
~-
were liable to be included in total income under s. 4. 'This income 
tould not be incJuded under s. 10 owing to the method of accountini 
D 
adopted by the assessee. Nor did it fall under any other head. It fol-
!owed that the income must fall unacr the residuary head specified 
in s. 12. This was not a case where tnc Revenue had taxed or could 
tax the income under s. 10 and again sought to tax the income 
Wlder s. 12. [306 C, G-H] 
avtL APPELLATE JURJSDlCTlO!'oi: Civil Appeab Nos. 731-73~ 
of 1964. 
Appeals by special leave from the order dated January 29, 
1963 of the Com

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