Income held to be ‘Revenue Receipt’ on the Basis of Statement by Appellant that his post in Trust was not Lifetime: SC [Read Order]

The Supreme Court of India in a matter between H.S. Ramchandra Rao v CIT on the basis of statement-admission by the appellant that he was holding the impugned post in the Trust until 1996 by virtue of which the amount was received, it to be treated as revenue receipt.

The issue before the Hon’ble Court is the determination of the nature of the amount received by the appellant I.e. whether the receipt is a capital receipt or revenue receipt.

The Bench constituting of Justices A.M. Khanwilkar and D. Maheshwari held that the amount received is in the nature of revenue receipt. The sole basis of the finding is the authorities’ reliance on the appellant’s statement- admission that the appellant was holding the post of Secretary of a Trust until 1996 and left the same after new members were elected as the managing committee. Hence, the Court, considering the aforementioned facts held that the question of appellant invoking the principle of the capital asset does not arise.

The Court further stated that it would have ruled differently in the case of lifetime appointment of the appellant as Secretary of the concerned Trust/institution. However, in the absence of any evidence proving the same, the Court cannot assume so.