The document discusses the taxability of an award received by Shri Aroon Purie for excellence in journalism. It summarizes a court case from 2015 where the Delhi High Court ruled the award was a non-taxable capital receipt. However, the document notes that awards are now generally taxable under current law if over Rs. 50,000, received without consideration from non-relatives. It cautions that while the specifics of what constitutes "property" are defined, awards would likely be considered taxable if challenged in court today given amendments to the tax code regarding receipts without consideration.

1. Our Verdict on Award to Aroon
Whether an honor received in cash is taxable was the question that was put to us by
Shri Deven Kanal (Reader’s Digest, August 2015, Page 48).
In AROON PURIE Vs COMMISSIONER OF INCOME TAX [2015-TIOL-828-HC-DEL
-IT] the Delhi High Court looked into taxability of the award received during
financial year 1990-91 by the appellant, Shri Aroon Purie, being B D Goenka award
for excellence in Journalism.
The case has been scrutinized by the learned judges in terms of:
(i) Whether the receipt is capital or revenue in nature?
(ii) Whether it is an income?
(iii) Under what head is it taxed?
(a) Income from Salary: whether Section 17 was invoked?
(b) Income from Business or profession: whether the Revenue submitted
and asserted that the income is taxable under this head?
(c) Income from other sources?
(iv) Whether the receipt is covered by Section 10 (17A) under Income that is
exempt?
The appellant had submitted that the receipt in question from B. D. Goenka
Foundation was in the nature of testimonial or personal gift unrelated to any
consideration or services. The Revenue had submitted that, Income includes a receipt
partaking the nature of income, irrespective of the nomenclature given to it by the
parties to the transaction and the quantum of amount.

2. After ascertaining the nature and circumstances of the receipt and past judicial
views, the Honorable Court concluded that it is a capital receipt and hence non
taxable.
Awards are now taxable
We may not yet conclude that all awards are exempt from tax because Shri Aroon
Purie won his case. A pertinent question is that when certain awards are specifically
notified to be exempt from tax, is it not natural to assume that all other awards are
taxable?
Moot point may be the taxability of an award as a receipt without consideration.
There is a history of taxability of receipt without consideration.
(i) Section 56(2) (v)-Sum of money received from persons other than relatives
above Rupees 25,000/- between 1/9/2004 and 31/3/2005
(ii) Section 56(2)(vi) - Sum of money received from persons other than
relatives above Rupees 50,000/- between 1/4/2006 and 30/9/2009
(iii) Section 56(2)(vii)- Sum of money, immovable property and movable
property received from persons other than relatives on or after 1/10/2009
Taxability of receipt without consideration was debatable when (1990-91) Shri Aroon
Purie received the gift. An inclusive definition of income did not help the Revenue;
hence, later on the above amendments came.
Thus, today the law is that gifts exceeding aggregate amount of Rs 50,000/- in a
previous year whether movable or immovable from unrelated persons shall also be
treated as Income as per Section 56 (2) (vii). Let us recall that Readers Digest itself
took this view in December 2014 (S Rajan, Page 86). Assessees are cautioned to go by
this view as it is a credible view, yet surprisingly not supported by legal fiction. The
Income Tax Act says gift of movable and immovable property is taxable. But it has
exclusively defined what property is. A Car, for example, is not property as per the
given definition. Hence we might argue that a Car given as gift will not be taxable
under the present law. What the Assessing Officer will decide if we gift a Maserati is
not to be left guessing!
At present, it is safer to conclude that a transfer with consideration is taxable anyway
and without consideration above the threshold limit in value will be taxable. Thus
the case cannot be considered as a landmark for recipients winning monetary
awards in future as the author suggests. The potential of misuse is substantial in our
country.

3. The fact that Shri Aroon Purie continued the fight from 1992 deserves a special
reward, non taxable. However, the inordinate delay in legal proceedings in the
country certainly does not deserve any award.
END
Lukose Joseph, (CA)
Anil P Nair (CA)