By TIOL News Service

ERNAKULAM, FEB 03, 2014: THE issue before the Bench is - Whether when the assessee is an astrologer and receives certain payments from political leaders for making precise predictions on the outcome of elections, such receipt is to be taxed as business income. And the answer is YES.

Facts of the case

The assessee, an individual, is an Astrologer by profession. He had filed return of income disclosing a turnover of 2,67,430/-. After claiming various expenses, he returned an amount of 1,89,751/- as income from his profession. In the statement of affairs as on 31.3.2002, it had shown 10,00,000/- being contribution from certain persons and claimed that the said sum had been exempted. During assessment, the AO rejected the said contention. An appeal was filed before the Tribunal and the Tribunal concurred with the view expressed by the lower authorities. Before the HC, the assessee's counsel contended that the amount of 10,00,000/- was received from some persons who had given confirmation letters. In the confirmation letters they indicated that the contributions were paid by them since they were happy on account of the assembly election results of Tamil Nadu in the year 2001. As far as the assessee was concerned, he was an Astrologer by profession and he predicted the election results of the leaders and since the persons mentioned aforesaid were grateful to the predictions made, these contributions were made. The contributions being in the form of gift was not taxable and therefore, AO committed an error of law in taking into consideration the said amount as a taxable income. On the other hand, the Revenue's counsel contended that no question of law arose for consideration in this matter. The assessee originally contended that the amounts were received from various persons from Tamil Nadu and later letters were given stating that an amount of 10,00,000/- was received from seven political leaders. Since the AO, the CIT(A) and Tribunal considered the entire questions on the factual materials available on record and had found that Rs 10,00,000/- was the income from business of the assessee, no question of law arose for consideration.

Held that,

++ the only question to be considered is whether the amount of 10,00,000/- is the income from the business of the assessee or received by the assessee in the form of gift from the persons mentioned in the confirmation letters. On a reference to the assessment order, it is clear that the assessee had originally made a statement that the amount was received from several persons from Tamil Nadu. It was later that he was able to produce the confirmation letters which only indicated that the assessee was instrumental in the election victory of certain candidates and that as a mark of admiration, some amount was given to the assessee. The AO proceeded on the basis that the assessee had rendered certain services in the form of performing poojas and further procedures. The amounts were paid when certain candidates were elected in the election as stated by the assessee. This, according to AO, has to be treated as an income from business. As without rendering service, there was no question of assessee getting such amounts from the persons alleged to have given such amounts to the assessee. The appellate authority also concurred with the said view;

++ the judgments relied upon by the appellant were not applicable to the factual situation raised in this case on account of the findings in the assessment order as well as by the appellate authorities. The Tribunal also on a re-appreciation of the evidence as well as the legal issues involved in the matter concurred with the view expressed by the appellate authority as well as the AO. In that view of the matter, we do no think that any substantial question of law arises for consideration in the above appeal. We confirm the findings of the Tribunal in this regard.

(See 2014-TIOL-135-HC-KERALA-IT)