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Case law › Circulars › 1974 › Circular No. 158
CBDT circular 27 December 1974

Circular No. 158

Sections 10, 11, 12, 12A and 13

What this is

Circular No. 158 was issued by the Central Board of Direct Taxes on 27 December 1974. Its subject is Sections 10, 11, 12, 12A and 13.

This grants an exemption or a relief under a provision that allows one. Read the conditions attached: an exemption notification is construed strictly, and a condition missed is the exemption lost.

What it does

Answers whether the withdrawal of the exemption for casual and non-recurring receipts makes gifts taxable. Section 10(3) was amended by the Finance Act, 1972 so that such receipts above Rs. 1,000 are no longer exempt. The Board's position is that a casual and non-recurring receipt is taxable only if it can properly be characterised as income, either in the ordinary sense or within the extended meaning the Income-tax Act gives the word. So gifts of a purely personal nature are not chargeable, except where they can be regarded as an addition to salary or where they arise from the exercise of a profession or vocation.

Why it was issued

A question arose whether the 1972 amendment to section 10(3) brought receipts in the form of gifts into charge.

Who it reaches

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.
Under the 1961 ActNow
s.4s.4
s.10s.11, s.19

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

SECTIONS 10, 11, 12, 12A AND 13
Incomes which do not form part of total income
SECTION 10(3) l RECEIPT OF CASUAL AND NON-RECURRING NATURE [CORRESPONDING TO SECTION 4(3)(vii) OF THE 1922 ACT]
46. Effect of withdrawal of tax exemption in respect of receipts of casual and non-recurring nature on liability to tax in respect of gifts
1. Section 10(3) was amended by the Finance Act, 1972 by which receipts of casual and non-recurring nature in excess of Rs. 1,000 would no longer be exempt from tax. A question has arisen as to whether this amendment would make receipts in the form of gifts liable to income-tax.
2. Receipts which are of a casual and non-recurring nature will be liable to income-tax only if they can properly be characterised as "income" either in its general connotation or within the extended meaning given to the term by the Income-tax Act. Hence, gifts of a purely personal nature will not be chargeable to income-tax except when they can be regarded as an addition to the salary or when they arise from the exercise of a profession or vocation.
Circular : No. 158 [F. No. 173/2/73-IT(A-I)], dated 27-12-1974.

What to watch

Where you meet it

An addition of a gift as casual and non-recurring income in an individual's assessment, or a perquisite addition for a gift received from an employer.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

← Circular No. 159  ·  Circular No. 157 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.