Professional income versus salary: film contract receipts stayed taxable as professional income, not employment earnings.

Temporary contractual engagements entered into while practising a profession do not become salary employment unless the professional has given up the profession and accepted permanent service. On the facts, the assessee remained a film actress and merely lent her services for individual films for limited periods, so the receipts were incidental to her profession. The amounts were therefore assessable as professional income under Section 10 and not as salary under Section 7.

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Issues: Whether the assessee's receipts from film contracts were taxable as salary under Section 7 of the Indian Income-tax Act or as income from the practice of a profession under Section 10.

Analysis: The decisive question was not merely whether the contracts created a temporary relationship resembling service, but whether the assessee had given up her profession and entered permanent employment. A professional person may enter into temporary engagements in the course of practising the profession, and such engagements do not cease to be professional merely because services are rendered under contract. On the facts, the assessee remained a film actress practising her profession and only lent her services for particular films for limited periods. The engagements were incidental to the profession and did not convert the receipts into salary.

Conclusion: The income was assessable under Section 10 and not under Section 7, in favour of the assessee.

Ratio Decidendi: Temporary contractual engagements entered into in the course of practising a profession do not become salary employment unless the professional gives up the profession and accepts permanent service.

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