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BATTA KALYANI V. COMMISSIONER OF INCOME TAX (1985)154 ITR 59

 

BATTA KALYANI V. COMMISSIONER OF INCOME TAX (1985)154 ITR 59

FACTS

  • Batta Kalyani, the assessee, operated hardware and paint shops as a sole proprietor.
  • She employed her husband, B. Venkataramaiah, to manage the business and paid him a salary.
  • The Income Tax Officer (ITO) included the salary paid to her husband in Batta Kalyani's total income under Section 64(1)(ii) of the Income Tax Act.
  • The ITO held that the husband lacked technical or professional qualifications and the income wasn't solely attributable to his expertise.
  • Batta Kalyani appealed to the Appellate Assistant Commissioner (AAC), who ruled in her favour, stating that the proviso to Section 64(1)(ii) applied, exempting the salary from inclusion.
  • The ITO appealed to the Appellate Tribunal, which allowed the appeal, rejecting the application of the proviso and upholding the inclusion of the salary.
  • The Tribunal concluded that technical or professional qualifications must be from a recognized body and found no evidence that the husband's income was solely attributable to his expertise.
  • Batta Kalyani sought reference to the Supreme court under Section 256(1) of the Act 1961.

ISSUE

  • Whether the salary paid to Batta Kalyani's husband should be included in her total income under Section 64(1)(ii) of the Income Tax Act 1961.

RULE

  • The proviso to Section 64(1)(ii) exempts income solely attributable to technical or professional qualifications.
  • The interpretation of "technical or professional qualification" includes expertise in a profession or technique, not necessarily certified by a recognized body.

HELD

  • The Tribunal erred in limiting technical or professional qualifications to certifications from recognized bodies.
  • The legislature's use of "knowledge and experience" in the proviso indicates a broader interpretation.
  • If income is solely attributable to technical or professional expertise, qualification from a recognized body isn't mandatory.
  • However, in this case, there was no evidence that the husband's income solely stemmed from his expertise.
  • The Tribunal was justified in including the salary paid to Batta Kalyani's husband in her total income under Section 64(1)(ii).
  • As both requirements of the proviso weren't met, the court ruled in favour of the Revenue and against the assessee.

COMMENTARIES RATIO/NOTE-

  • Where the spouse was drawing salary as nurse-cum-supervisor from a nursing home in which her husband was a partner, although she was B.Sc. in Bio-science but did not possess any professional or basic qualification as nurse from any recognised institute, it was held that in view of the nature employment of the spouse, a degree, a certificate or diploma in some cases may be insisted upon. [CIT v Pratima Saha (Smt.) (1999) 239 ITR 570 (Gau)]