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Issues: Whether the assessee's share of Rs. 7,000 received as the second instalment of remuneration for acting as an arbitrator was exempt from assessment as a casual and non-recurring receipt not arising from business, profession, vocation or occupation.
Analysis: The receipt was examined only with reference to Section 4 of the Indian Income-tax Act. The assessee was a merchant and his participation as an arbitrator was unrelated to his business. No remuneration had been stipulated when he agreed to act, and payment was later sanctioned because the work had taken much more time than expected. The services were rendered in a special family dispute and were not those of a professional arbitrator. The possibility that he might act in some other arbitration did not make the receipt recurring, since the source lacked continuity and the payment arose from exceptional circumstances. On these facts, the sum was held to be a receipt of a casual and non-recurring nature.
Conclusion: The Rs. 7,000 was not assessable to income-tax and was entitled to exemption under Section 4(3)(vii) of the Indian Income-tax Act.
Ratio Decidendi: A payment received for an isolated, non-professional service rendered in exceptional circumstances, without any prior obligation to remunerate and without continuity of source, is a casual and non-recurring receipt exempt from tax.
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