Income - Definition - Law Dictionary Home Dictionary Definition income

Definition :

Income, s. 4 of the Income-tax Act, defines the 'total income' to include all income, profits and gains from whatever source deprived. The definition of 'income' in Shaw Wallace & Co. case, 1932 (59) IA 206, as a periodical monetary return coming in with some sort of regularity, or expected regularity, from definite sources must be read with reference to the peculiar facts of that case. Money received 'under consequential loss policies, were income within the meaning of s. 2(6c) of the Income Tax Act, Raghuvanshi Mills Ltd. v. Commissioner of Income Tax, AIR 1953 SC 4: (1953) SCR 177.

Income connotes a periodical monetary return 'coming in' with some sort of regularity, or expected regularity from definite sources, E.D. Sassoon and Co. Ltd. v. Commissioner of Income Tax, AIR 1954 SC 470: (1955) 1 SCR 313.

The expression 'income' in entry 54 of List I of the Seventh Schedule to the Government of India Act, 1935, and the corresponding entry 82 of List 1 of the Seventh Schedule to the Constitution of India, shall be widely and liberally construed so as to enable a Legislature to provide by law for the prevention of evasion of income-tax, Punjab Distilling Industries Ltd. v. CIT, AIR 1965 SC 1862: (1965) 3 SCR 1.

The expression 'income' in its normal connotation does not mean mere production or receipt of a commodity which may be converted into money. Income arises when the commodity is disposed of by sale consumption or use in the manufacture or other processes carried on by the assesses qua that commodity. It is not necessary, however, for income to accrue that there must be a sale of a commodity: consumption or use of a commodity in the business of the assessee from which the assessee obtains benefit of the commodity may be deemed to give rise to income, S.S. Rajalinga Raja v. State of Madras, AIR 1967 SC 814: (1967) 1 SCR 950.

It would not, however, be wrong to say that prima facie premium or salami is not income and it would be for the income-tax authorities to show that facts exist which would make it a revenue receipt, Durga Das Khanna v. Commissioner of Income Tax, AIR 1969 SC 775: (1969) 3 SCR 462.

'Income' connotes a periodical monetary return com-ing in with some sort of regularity or expected regularity from definite sources, A.K.T.K.M. Vishnudatta Andharjanam represented by D.V. Nambudiripad Desamangalam v. Commissioner of Agricultural Income-tax, AIR 1970 SC 2055: (1970) 2 SCC 165: (1971) 1 SCR 535.

The expression 'income' includes not merely what is received or what comes in by exploiting the use of a property but also what one saves by using it oneself. That which can be converted into income can be reasonably regarded as giving rise to income, Bhagwan Dass Jain v. Union of India, AIR 1981 SC 907: (1981) 2 SCC 135: (1981) 2 SCR 808.

The expression 'income' in Entry 82, List I cannot be subjected, by implication, to any restriction by the way in which that term might have been deployed in a fiscal statute. The expression 'income' in the legislative entry has always been understood in a wide and comprehensive connotation to embrace within it every kind of receipt or gain either of a capital nature or of a revenue nature, Elel Hotels and Investments Ltd. v. Union of India, AIR 1990 SC 1664: (1989) 3 SCC 698.

The word 'income', ordinarily in normal sense, connotes any earning or profit or gain periodically, regularly or even daily in whatever manner and from whatever source. Thus it is a word of very wide import, Universal Radiators v. CIT, AIR 1993 SC 2254 (2256): (1993) 2 SCC 629.

Prize money received by the participant in a Motor Rally is 'income' and is liable to tax, CIT v. G.R. Karthikeyan, AIR 1993 SC 1671 (1675). [Income-tax Act, 1961, s. 2(24)]

The terms 'income' is elastic and has a wide connotation. Whatever comes in or is received, is income. But, however wide the import and connotation of the term 'income', it is incapable of being understood as meaning receipt having no nexus to one's labour, or expertise, or property, or investment, and having further a source which may or may not yield a regular revenue. These essential characteristics are vital in understanding the term 'income'. Therefore, it can be said that, though 'income' is receipt in the hand of its receipt, every receipt would not partake the character of income. Qua the public servant, whatever return he gets from his service, will be the primary item of his income. Other incomes which conceivably are income qua the public servant, will be in the regular receipt from (a) his property, or (b) his investment. A receipt from windfall, or gains of graft, crime or immoral secretions by persons prima facie would not be receipt from the 'known sources of income' of a public servant, State of Madhya Pradesh v. Awadh Kishore Gupta, (2004) 1 SCC 691 (697): AIR 2004 SC 517. [Prevention of Corruption Act, 1988, s. 13(1)(e)]

Income Travelling allowance is not a source of income, R. Janaht Raman v. State, (2006) 1 SCC 697.

Income, that monthly sums paid by a husband to his wife (who was adjudicated bankrupt) ' under a covenant in deed executed during the pendency of the wife's application for an order for maintenance on dissolution of their marriage, constituted 'income' within section 51(2) of the English Bankruptcy Act, 1914, P. Veerasamy v. Official Assignee, (1999) 2 SCC 505.

Maintenance ordered to be paid by the Divorce Division to a bankrupt wife during the joint lives of herself and her former husband, was held to be 'income', Landau case, (1934) Ch 549 (554, 556): 151 LT 190 (CA).

Was to be construed 'ejusdem generis' like salary, Huttan, Benwell Ex parte, (1884) 14 QBD 301 (307) (CA).

Means income in the nature of salary and it has reference to a particular period such as a year or some part of a year, Mulla, Law of Insolvency, 3rd Edn., 1977, p. 459.

Means to exclude all means not yielding any income, Gita Chatterji v. Prabhat Kumar Chatterji, AIR 1988 Cal 83; see also Neelam v. Rajinder, AIR 1994 Del 234.