Cash award received by editor for excellence in journalism is tax-free as it is a capital receipt

AROONPURIE V. COMMISSIONER OF INCOME-TAX (2015) 56 taxmann.com 80 (Delhi High Court)
 
Rs. 1 lakh received by the assessee as an award from B.D. Goenka Trust for excellence in Journalism would be a capital receipt and, hence, not taxable.

Facts:

• Appellant-assessee was editor-in-chief of a reputed English magazine and derived income from salary, interest, dividend and property. 
• He claimed exemption of Rs.1 lakh received by him as an award from B.D. Goenka Trust for excellence in Journalism. 
• The Assessing Officer ('AO') disallowed claim for exemption on the ground that it didn't satisfy conditions of section 10(17A) which exempts from tax awards instituted by Central/State Govt in public interest.
• On appeal, the CIT(A) allowed claim of assessee but same was reversed by ITAT. Aggreived-assessee filed the instant appeal before High Court.

The High Court held in favour of assessee as under:

• The primary reason of giving award in the assessee's case was not directly related to the carrying on of vocation as a journalist or publisher.The award for excellence in Journalism was directly linked with the personal achievements and personality of the assessee. Further, payment in the instant case was not of a periodical or repetitive nature. 
• The payment had been made by a third person and not made by an employer, who was not concerned with the activities or associated with the "vocation" of the appellant. 
• It being a payment of a personal nature, should be treated as capital payment, being akin to or like a gift, which does not have any element of quid pro quo. The impugned prize money was paid to the assessee on a voluntary basis and was purely gratis. 
• Hence, cash award of one lakh received from B.D. Goenka Trust for Excellence in Journalism would be a capital receipt and would not be taxable under Income Tax Act.