The Hindu Business Line : Tax on judges

This is with reference to "`Judged' not taxable" (Business Line, May 27). In the instant case the Income Tax Appellate Tribunal, Kolkata has categorically said that the money received by a judge, after his elevation, for the services rendered when he was an advocate is not taxable under Section 28 or 56 or 176(4). The assessee was following cash system of accounting. The decision was given based on certain High Court and Supreme Court rulings.

In this regard I wish to bring in a few more points. As per Section 4 of the Income Tax Act 1961, income of the previous year is chargeable to tax at the rates prescribed in the relevant assessment year.

Broadly, there are five exceptions to this rule and one among the exceptions is "Sum received from a discontinued business or profession." The instant case falls under this exception. In all the other four exceptions the income of the previous year is taxable in the same year. There is a change in treatment in the instant exception. Section 176(4) says: Where any business is discontinued in any year, any sum received after discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt.

The same logic holds good where a profession is discontinued any year on account of cessation of the profession or by the or death of the person carrying on the profession. An interesting point to note is that the power of Assessing Officer to this section in all the other four exceptions is mandatory in this case it is purely discretionary.

A. N. V. Ramani

Chennai

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Tax on judges