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)]