I stopped practising only because I was appointed a judge, and I went back to the Bar when I retired. Surely that is a suspension and not a discontinuance, so section 176(4) cannot apply to fees I received while I was on the Bench?
That argument was run and rejected. The Andhra Pradesh High Court held that both 'discontinuance' and 'cessation' in section 176(4) take in temporary as well as permanent discontinuance, that the length of time for which the profession is stopped is not an element of the concept, and that the question whether the cessation was voluntary or involuntary has no bearing on the application of the sub-section. It also rejected the reading that the sub-section is confined to discontinuance by retirement or death, holding that the words 'on account of' govern cessation of the profession, retirement and death equally. The writ petition was dismissed.
Decided by the High Court (Single Judge, High Court of Andhra Pradesh (the judgment is written in the first person singular; the judge's name is not printed on the text available at either URL read this pass)) on 1975-09-11, reported as Writ petition under Article 226 of the Constitution; assessment years 1969-70 and 1970-71. The decision is cited in Commissioner of Income-tax v. Justice R.M. Datta as V. Parthasarathy v. Addl. CIT [1976] 103 ITR 508.. It bears on section 176(4), section 176, section 176(1), section 176(2), section 176(3), section 264, section 4, section 14, section 56 of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
This is the Revenue's side of the section 176(4) line and the answer to the most attractive argument a retired judge or a professional on a career break has. The Court's grammatical point is the one to be ready for: the clause is to be read as though it said 'where any profession is discontinued in any year on account of the cessation of the profession by the person carrying on the profession, or where any profession is discontinued in any year on account of the retirement of the person, or where any profession is discontinued in any year on account of the death of the person' — so cessation is an independent trigger and not merely a preface to retirement and death. Its second point is that discontinuance means stoppage, and that if permanence were required only death would qualify in a profession, which the Court thought an unreasonable reading. It supported that from the converse side, with the Calcutta decision in CIT v. Sarat Chandra Bose [1950] 18 ITR 669 under section 25(3) of the 1922 Act, where an assessee argued for temporary discontinuance to get relief, and with Justice Iqbal Ahmad, In re, where cessation on appointment to the Bench was held to be discontinuance for section 25(3). And it recorded the provision's origin: it was introduced on the recommendation of the Direct Taxes Administration Enquiry Committee of 1958-59, which said there was no provision to assess income received after the cessation of practice, retirement or death of solicitors, advocates, doctors, consulting surveyors and engineers. Read the limits carefully, because they are what a taxpayer should exploit. The Court did NOT decide whether such a receipt can be computed and brought to charge at all: it noted at its paragraph 16 that the Revenue's alternative case that the income was chargeable as income from other sources did not arise, because neither the Income-tax Officer nor the Commissioner had assessed it on that footing and the tax had been assessed having regard to section 176(4). The head-of-charge and further-fiction contentions that succeeded in Calcutta in Commissioner of Income-tax v. Justice R.M. Datta were never argued here — that Court said so expressly.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
Read aloud by your device. Press again to stop.
Sri Valluri Parthasarathy practised as an advocate of the High Court of Andhra Pradesh until 4 April 1968, when he was appointed a judge of that High Court and, on account of the constitutional disability, ceased to practise. He retired as a judge on 6 March 1972 and in June 1972 informed the Bar Council of Andhra Pradesh that he was resuming practice subject to Article 220 of the Constitution. During assessment year 1969-70 he received Rs 11,000 and during 1970-71 Rs 3,000 by way of fees for professional services rendered before his appointment. The Income-tax Officer assessed those amounts to tax. No appeal was filed to the Assistant Commissioner; a revision petition under section 264 was dismissed by the Commissioner of Income-tax on 31 October 1972. The petitioner then moved the High Court under Article 226, contending that he had not discontinued but merely suspended his profession on account of the constitutional disability, that section 176(4) is attracted only where the discontinuance is due to retirement or death, and that in any event the sub-section covers only voluntary and not involuntary cessation. The Revenue contended that even temporary suspension of a business or profession for whatever reason is covered, and additionally that the receipts were chargeable as income from other sources.
The writ petition was dismissed, without costs. The Court held that the expression 'on account of' in section 176(4) governs cessation of the profession, retirement and death equally, so that the sub-section is not confined to discontinuance by retirement or death; that both 'discontinuance' and 'cessation' in the context in which they are employed take in temporary as well as permanent discontinuance, the length of time for which the profession is stopped not being an element of the concept; that the question whether the cessation was voluntary or involuntary has no bearing on the application of the sub-section; and that accordingly, irrespective of whether the cessation was for a short or long period and irrespective of whether the discontinuance was temporary or permanent, the assessee was liable to pay tax on the income received on account of the profession he had discontinued (paragraphs 7, 9, 12 and 17). The Court expressly declined to consider the Revenue's alternative contention that the income was chargeable as income from other sources, because neither the Income-tax Officer nor the Commissioner had assessed it on that footing (paragraph 16).
The Court began with Nalinikant Ambalal Mody v. S.A.L. Narayan Row, CIT, setting out the Supreme Court's holdings that the head under which an income falls does not depend on when it was received, that income which falls under the fourth head cannot be taken to the residuary head, and that an income can be charged only if chargeable under the computing section corresponding to its head (paragraphs 2 and 3). It set out section 25 of the 1922 Act and its successor, section 176, as then in force (paragraph 4), and identified the conditions in sub-section (4) as discontinuance on account of (1) cessation of the profession by the person, (2) his retirement, or (3) his death (paragraph 5). On the first contention, it analysed the punctuation and structure of the clause and held that the correct reading splits it into three limbs, each governed by 'on account of', and rejected the argument that only retirement and death qualify (paragraphs 6 and 7). On the second contention, that discontinuance must be permanent because section 176 sits in Chapter XV under the sub-heading 'Discontinuance of business, or dissolution', the Court set out the whole scheme of sub-headings A to O of that Chapter and held that discontinuance may be temporary or permanent, that it is only the factum of stoppage that is relevant, and that if permanence were required then in the case of a profession complete cessation could be predicated only on death; if the discontinuance is by retirement nothing prevents resumption, and if by involuntary cessation on constitutional disability the person may resume when the disability ceases (paragraph 9). It drew support from CIT v. Sarat Chandra Bose [1950] 18 ITR 669 (Cal), a converse case under section 25(3) of the 1922 Act in which Chatterjee J. had refused to accept that there must be complete cessation for the rest of a man's life, and from Justice Iqbal Ahmad, In re, where cessation of practice on appointment to the Allahabad High Court was construed as discontinuance for section 25(3) (paragraphs 10 and 11). It set out the recommendation of the Direct Taxes Administration Enquiry Committee of 1958-59 on which the provision was introduced, and reasoned that if income received after discontinuance is intended to be charged there is no reason to exclude income received after a temporary cessation (paragraphs 11 and 12). Finally it declined to decide the Revenue's alternative 'income from other sources' contention because the assessment had been made having regard to section 176(4) and on no other footing (paragraph 16).
Having regard to the view I have taken that, irrespective of whether the cessation of the profession was for a short or long period and irrespective of whether the discontinuance of the profession was temporary or permanent, the assessee would be liable to pay tax for the income received by him on account of the profession which he has discontinued.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppThat argument was run and rejected. The Andhra Pradesh High Court held that both 'discontinuance' and 'cessation' in section 176(4) take in temporary as well as permanent discontinuance, that the length of time for which the profession is stopped is not an element of the concept, and that the question whether the cessation was voluntary or involuntary has no bearing on the application of the sub-section. It also rejected the reading that the sub-section is confined to discontinuance by retirement or death, holding that the words 'on account of' govern cessation of the profession, retirement and death equally. The writ petition was dismissed. This was decided by the High Court (Single Judge, High Court of Andhra Pradesh (the judgment is written in the first person singular; the judge's name is not printed on the text available at either URL read this pass)) and bears on section 176(4), section 176, section 176(1), section 176(2), section 176(3), section 264, section 4, section 14, section 56 of the Income Tax Act 1961. It is reported as Writ petition under Article 226 of the Constitution; assessment years 1969-70 and 1970-71. The decision is cited in Commissioner of Income-tax v. Justice R.M. Datta as V. Parthasarathy v. Addl. CIT [1976] 103 ITR 508.. This is the Revenue's side of the section 176(4) line and the answer to the most attractive argument a retired judge or a professional on a career break has. The Court's grammatical point is the one to be ready for: the clause is to be read as though it said 'where any profession is discontinued in any year on account of the cessation of the profession by the person carrying on the profession, or where any profession is discontinued in any year on account of the retirement of the person, or where any profession is discontinued in any year on account of the death of the person' — so cessation is an independent trigger and not merely a preface to retirement and death. Its second point is that discontinuance means stoppage, and that if permanence were required only death would qualify in a profession, which the Court thought an unreasonable reading. It supported that from the converse side, with the Calcutta decision in CIT v. Sarat Chandra Bose [1950] 18 ITR 669 under section 25(3) of the 1922 Act, where an assessee argued for temporary discontinuance to get relief, and with Justice Iqbal Ahmad, In re, where cessation on appointment to the Bench was held to be discontinuance for section 25(3). And it recorded the provision's origin: it was introduced on the recommendation of the Direct Taxes Administration Enquiry Committee of 1958-59, which said there was no provision to assess income received after the cessation of practice, retirement or death of solicitors, advocates, doctors, consulting surveyors and engineers. Read the limits carefully, because they are what a taxpayer should exploit. The Court did NOT decide whether such a receipt can be computed and brought to charge at all: it noted at its paragraph 16 that the Revenue's alternative case that the income was chargeable as income from other sources did not arise, because neither the Income-tax Officer nor the Commissioner had assessed it on that footing and the tax had been assessed having regard to section 176(4). The head-of-charge and further-fiction contentions that succeeded in Calcutta in Commissioner of Income-tax v. Justice R.M. Datta were never argued here — that Court said so expressly. If it applies to you, the first step is this: Do not build a case on the difference between suspension and discontinuance. On this decision, discontinuance means stoppage and its duration is irrelevant.
Sri Valluri Parthasarathy practised as an advocate of the High Court of Andhra Pradesh until 4 April 1968, when he was appointed a judge of that High Court and, on account of the constitutional disability, ceased to practise. He retired as a judge on 6 March 1972 and in June 1972 informed the Bar Council of Andhra Pradesh that he was resuming practice subject to Article 220 of the Constitution. During assessment year 1969-70 he received Rs 11,000 and during 1970-71 Rs 3,000 by way of fees for professional services rendered before his appointment. The Income-tax Officer assessed those amounts to tax. No appeal was filed to the Assistant Commissioner; a revision petition under section 264 was dismissed by the Commissioner of Income-tax on 31 October 1972. The petitioner then moved the High Court under Article 226, contending that he had not discontinued but merely suspended his profession on account of the constitutional disability, that section 176(4) is attracted only where the discontinuance is due to retirement or death, and that in any event the sub-section covers only voluntary and not involuntary cessation. The Revenue contended that even temporary suspension of a business or profession for whatever reason is covered, and additionally that the receipts were chargeable as income from other sources. The matter was decided on 1975-09-11 by the High Court (Single Judge, High Court of Andhra Pradesh (the judgment is written in the first person singular; the judge's name is not printed on the text available at either URL read this pass)). On those facts the High Court held as follows. The writ petition was dismissed, without costs. The Court held that the expression 'on account of' in section 176(4) governs cessation of the profession, retirement and death equally, so that the sub-section is not confined to discontinuance by retirement or death; that both 'discontinuance' and 'cessation' in the context in which they are employed take in temporary as well as permanent discontinuance, the length of time for which the profession is stopped not being an element of the concept; that the question whether the cessation was voluntary or involuntary has no bearing on the application of the sub-section; and that accordingly, irrespective of whether the cessation was for a short or long period and irrespective of whether the discontinuance was temporary or permanent, the assessee was liable to pay tax on the income received on account of the profession he had discontinued (paragraphs 7, 9, 12 and 17). The Court expressly declined to consider the Revenue's alternative contention that the income was chargeable as income from other sources, because neither the Income-tax Officer nor the Commissioner had assessed it on that footing (paragraph 16).
The Court began with Nalinikant Ambalal Mody v. S.A.L. Narayan Row, CIT, setting out the Supreme Court's holdings that the head under which an income falls does not depend on when it was received, that income which falls under the fourth head cannot be taken to the residuary head, and that an income can be charged only if chargeable under the computing section corresponding to its head (paragraphs 2 and 3). It set out section 25 of the 1922 Act and its successor, section 176, as then in force (paragraph 4), and identified the conditions in sub-section (4) as discontinuance on account of (1) cessation of the profession by the person, (2) his retirement, or (3) his death (paragraph 5). On the first contention, it analysed the punctuation and structure of the clause and held that the correct reading splits it into three limbs, each governed by 'on account of', and rejected the argument that only retirement and death qualify (paragraphs 6 and 7). On the second contention, that discontinuance must be permanent because section 176 sits in Chapter XV under the sub-heading 'Discontinuance of business, or dissolution', the Court set out the whole scheme of sub-headings A to O of that Chapter and held that discontinuance may be temporary or permanent, that it is only the factum of stoppage that is relevant, and that if permanence were required then in the case of a profession complete cessation could be predicated only on death; if the discontinuance is by retirement nothing prevents resumption, and if by involuntary cessation on constitutional disability the person may resume when the disability ceases (paragraph 9). It drew support from CIT v. Sarat Chandra Bose [1950] 18 ITR 669 (Cal), a converse case under section 25(3) of the 1922 Act in which Chatterjee J. had refused to accept that there must be complete cessation for the rest of a man's life, and from Justice Iqbal Ahmad, In re, where cessation of practice on appointment to the Allahabad High Court was construed as discontinuance for section 25(3) (paragraphs 10 and 11). It set out the recommendation of the Direct Taxes Administration Enquiry Committee of 1958-59 on which the provision was introduced, and reasoned that if income received after discontinuance is intended to be charged there is no reason to exclude income received after a temporary cessation (paragraphs 11 and 12). Finally it declined to decide the Revenue's alternative 'income from other sources' contention because the assessment had been made having regard to section 176(4) and on no other footing (paragraph 16). In the words reproduced by the source cited on this page: "Having regard to the view I have taken that, irrespective of whether the cessation of the profession was for a short or long period and irrespective of whether the discontinuance of the profession was temporary or permanent, the assessee would be liable to pay tax for the income received by him on account of the profession which he has discontinued."
It was decided by the High Court on 1975-09-11 and is reported as Writ petition under Article 226 of the Constitution; assessment years 1969-70 and 1970-71. The decision is cited in Commissioner of Income-tax v. Justice R.M. Datta as V. Parthasarathy v. Addl. CIT [1976] 103 ITR 508.. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 176(4), section 176, section 176(1), section 176(2), section 176(3), section 264, section 4, section 14, section 56, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The writ petition was dismissed, without costs. The Court held that the expression 'on account of' in section 176(4) governs cessation of the profession, retirement and death equally, so that the sub-section is not confined to discontinuance by retirement or death; that both 'discontinuance' and 'cessation' in the context in which they are employed take in temporary as well as permanent discontinuance, the length of time for which the profession is stopped not being an element of the concept; that the question whether the cessation was voluntary or involuntary has no bearing on the application of the sub-section; and that accordingly, irrespective of whether the cessation was for a short or long period and irrespective of whether the discontinuance was temporary or permanent, the assessee was liable to pay tax on the income received on account of the profession he had discontinued (paragraphs 7, 9, 12 and 17). The Court expressly declined to consider the Revenue's alternative contention that the income was chargeable as income from other sources, because neither the Income-tax Officer nor the Commissioner had assessed it on that footing (paragraph 16). It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section 176(4), section 176, section 176(1), section 176(2), section 176(3), section 264, section 4, section 14, section 56 of the Income Tax Act 1961, and was decided by Single Judge, High Court of Andhra Pradesh (the judgment is written in the first person singular; the judge's name is not printed on the text available at either URL read this pass). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Do not argue that section 176(4) is confined to retirement and death. The Court held that 'on account of' governs cessation, retirement and death equally, and set out the clause split three ways. Do not argue that involuntary cessation is outside the sub-section; the Court held that the voluntary or involuntary character of the cessation has no bearing on its application. Where you are resisting the charge, shift the fight from 'was there a discontinuance' to 'can the deemed income be computed under any head', which is the argument that succeeded in Commissioner of Income-tax v. Justice R.M. Datta and which this Court never considered. Check what the assessment was actually made under. This Court declined at paragraph 16 to consider the Revenue's 'income from other sources' case because neither the Income-tax Officer nor the Commissioner had assessed on that basis; the same objection may be open on your facts. Note the procedural posture: the assessee here filed no appeal to the Appellate Assistant Commissioner and went by revision under section 264 and then by writ, which narrowed what could be argued. Preserve the ordinary appellate route.
Searched for later treatment; none was found. That is not the same as a source affirming it. Only six later documents cite this judgment and just one is a High Court. In CIT v Justice R.M. Datta (Calcutta High Court, 4 July 1989) the Bench accepted what Parthasarathy decided - 'In our view, the said decision is only an authority for the proposition that even involuntary suspension of the profession of law consequent upon the assessee's elevation to the office of judge amounts to discontinuance of the profession within the meaning of Section 176(4) of the Act' - but then confined it, holding that 'the decision reported in V. Parthasarathy cannot be said to have decided the questions raised in the present reference', and decided for the assessee on the separate ground that s.176(4) creates no further fiction fixing the head of charge. That is endorsement of the proposition, not adoption of its reasoning as a ground of decision, so it is not recorded as an application. The Chandigarh Tribunal in Justice Kuldip Singh v ITO (12 May 1993) held the decision 'was in a different context and was not therefore directly on the point'. No Supreme Court decision on s.176(4) discontinuance on elevation to the Bench has been found, and no trace of an appeal from this judgment. The discontinuance holding stands unchallenged but unapplied. So the discontinuance holding stands unchallenged but unapplied, and it should be put forward as a reasoned High Court decision rather than as a line of authority. Note too what it does not decide. It holds that 'discontinuance' and 'cessation' in s.176(4) take in temporary as well as permanent cessation, that the length of the stoppage is not an element of the concept, and that whether the cessation was voluntary or involuntary has no bearing; it does not decide under which head the post-discontinuance receipt is charged, which is the separate question on which the Calcutta High Court decided for the assessee. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
ON THE STRUCTURE. The judgment runs through numbered paragraphs 1 to 17, and paragraph 17 is the last, containing both the conclusion and the disposal: 'This writ petition fails and is accordingly dismissed, but in the circumstances of the case without costs. Advocate's fee Rs. 250.' Paragraph 17 has been read twice independently and came back word for word identically both times. ON THE BENCH. The judgment is written in the first person singular - 'In my view', 'I, therefore, have no hesitation' - so it is a single judge. The name of the judge is not printed on any text of it available, and the header carries no name, so no judge is named in this entry rather than a name being supplied from memory. The court is the Andhra Pradesh High Court, sitting before the bifurcation of the State. A WARNING ON LOCATORS, and it matters because most of the memorable language in this judgment is not the Court's. Paragraphs 2 and 3 reproduce long extracts from the Supreme Court in Nalinikant Ambalal Mody. Paragraph 4 reproduces section 176 as it then stood. Paragraph 10 reproduces an extract from CIT v. Sarat Chandra Bose. Paragraphs 13 and 14 reproduce extracts from Roma Bose v. Income-tax Officer. None of those words is this Court's own, and nothing in this entry is attributed to them. A WARNING ABOUT THE SECTION TEXT IN THE JUDGMENT. What paragraph 4 reproduces is the pre-1976 text of section 176, which speaks of the 'Income-tax Officer' and contains no sub-section (3A). That is legislative history and must not be read as the current provision; take the section as it stands for the year in issue. WHAT THE JUDGMENT ACTUALLY HOLDS, since the reasoning is spread thinly across reproductions. Both 'discontinuance' and 'cessation' in s.176(4) take in temporary as well as permanent discontinuance; the length of time for which the profession is stopped is not an element of the concept; and whether the cessation was voluntary or involuntary has no bearing on the application of the sub-section. The Court also rejected the reading that the sub-section is confined to discontinuance by retirement or death, holding that the words 'on account of' govern cessation of the profession, retirement and death equally. ON THE QUALITY OF THE TEXT. The report carries optical-recognition artefacts - 'Oa the other hand', 'where a ay profession', 'Ss also'. They are recorded here only to show that the text used is the raw report rather than a tidied rendering, and nothing has been quoted from a corrupted passage. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was dismissed, without costs. The Court held that the expression 'on account of' in section 176(4) governs cessation of the profession, retirement and death equally, so that the sub-section is not confined to discontinuance by retirement or death; that both 'discontinuance' and 'cessation' in the context in which they are employed take in temporary as well as permanent discontinuance, the length of time for which the profession is stopped not being an element of the concept; that the question whether the cessation was voluntary or involuntary has no bearing on the application of the sub-section; and that accordingly, irrespective of whether the cessation was for a short or long period and irrespective of whether the discontinuance was temporary or permanent, the assessee was liable to pay tax on the income received on account of the profession he had discontinued (paragraphs 7, 9, 12 and 17). The Court expressly declined to consider the Revenue's alternative contention that the income was chargeable as income from other sources, because neither the Income-tax Officer nor the Commissioner had assessed it on that footing (paragraph 16).
TaxSphere, “V. Parthasarathy v. Addl. Commissioner of Income-tax (Andhra Pradesh High Court, 11 September 1975) — 'discontinuance' in section 176(4) covers temporary and involuntary cessation, so an advocate elevated to the Bench has discontinued his profession”, https://taxnotice.vittsphere.com/caselaw/case/v-parthasarathy-176-4-discontinuance-includes-temporary-and-involuntary-cessation/ (validity last checked 2026-09-08)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
I shut my consultancy two years ago and money is still coming in for work I did before I closed. My accountant says section 176 taxes it. Which sub-section does that, what notice was I supposed to give when I closed, and how much time did I have?
I was an advocate on cash basis and stopped practising when I was appointed to the Bench. Fees for old work are still coming in. The Assessing Officer says section 176(4) makes them taxable. Is there an answer?
My father died and, years later, his firm's old fees kept coming in to us. Can the department tax those receipts as his income in our hands?
My company is still building its plant. It parked the unused part of its term loans in short-term bank deposits. Can I set the interest earned off against the interest I am paying, or must I pay tax on it?
