Casual and non-recurring receipts [Section 10(3)]

Receipts must be by chance, accident or fortuitous circumstances, and not otherwise - What is, essential about the receipt being ‘casual’ is that it must be the production of a chance, accident or fortuitous and that means that it is neither calculated nor settled nor is there any likelihood of its coming at a certain time. - CIT v. J.C. Wahal [1988] 170 ITR 635 (All.)/CIT v. Dr. P.N. Beh [1972] 84 ITR 125 (Delhi)/B. Malick v. CIT [1968] 67 ITR 616 (All.).

Receipt must not be foreseen or anticipated - A receipt of interest which is foreseen and antici­pated cannot be regarded as casual even if it is not likely to recur again - RM.AR.AR.RM.AR.AR. Ramanathan Chettiar v. CIT [1967] 63 ITR 458 (SC).

Amount taxable as capital gain but not so taxed is not casual receipt - If any amount of capital gain is not taxable as capital gain for any reason, that amount cannot be treated as a casual and non-recurring receipt under section 10(3) - B.K. Roy (P.) Ltd. v. CIT [1995] 211 ITR 500 (Cal.).

Non-taxable capital gains cannot be treated as casual income - If any amount of capital gains is non-taxable for any reason as capital gains, that amount cannot automatically be treated as a casual and non-recurring receipt under section 10(3). Capital receipts do not fall under section 10(3) - Cadell Wvg. & Mill Co. (P.) Ltd. v. CIT [2001] 116 Taxman 77 (Bom.).

Personal gifts are generally not taxable - Personal gift as a token of personal esteem and veneration is not taxable - CIT v. Sarbamangala Devi [1987] 163 ITR 898 (Pat.)/CIT v. Dr. P.R. Chakarvarty [1987] 165 ITR 345 (Pat.).

Receipts for contribution to magazines/newspapers are not exempt - The writing of books and contributing articles to periodicals and magazines constitutes a vocation and income from such voca­tion is not  exempt under section 4(3)(vii) of the 1922 Act - C. Rajagopalachariar v. CIT [1963] 50 ITR 196 (Mad.).

Income is taxable only if it arises from business - An income which is casual in nature can be brought to the revenue net only if it arises from business. - Universal Radiators v. CIT [1993] 68 Taxman 45 (SC).

‘Occupation’ must have same element of continuity and regularity - The word ‘occupation’ in section 10(3)(ii) must be understood in comprehensive sense as anything that occupies the time, labour and attention of the assessee. Whatever else ‘occupation’ may comprise, activity in specific line of endeavour which engages or occupies time and attention of a person and which is carried on with a certain amount of continuity or regularity in the sense that if is not ‘momentary’ - not ‘an isolated or semi-occasion­al and temporary adventure’ in that line of endeavour - would certainly constitute ‘occupation’ - K. Sankaran v. CIT [1978] 115 ITR 561 (Ker.).

Terminal payments by employer purely as personal gift are exempt - Where the employer of the assessee had paid him certain amount on the termination of his services and the amount paid was not in token of appreciation for the services rendered by the assessee, but was a personal gift on behalf of the employer for the person­al qualities of the assessee and as an employer’s token of per­sonal esteem, the impugned payment was casual income and was exempt - Mahesh Anantrai Pattani v. CIT [1961] 41 ITR 481 (SC).

Leave encashment while in service is not exempt - Leave encash­ment while in service is in the nature of addition to remunera­tion of the employee and not a casual and non-recurring receipt - M. Krishna Murthy v. CIT [1985] 152 ITR 163 (AP).

Incentive money received by lottery agent - Where an authorised agent of lottery tickets received a percentage of the prize money under the conditions laid down in the lottery scheme, the amount so received cannot be treated as casual and non-recurring receipt, but as received as part of the business activity, and brought to tax - CIT v. Bikram Singh Sood [2001] 249 ITR 454 (Delhi).