1951 (9) TMI 41 - HC - Income Tax

High Court rules film actress's income from fixed remuneration under specific Income-tax Act section.

COMMISSIONER OF INCOME-TAX, BOMBAY CITY Versus MRS. DURGA KHOTE

The Bombay High Court, in a judgment delivered by CHAGLA, C.J., and TENDOLKAR, J., ruled that the income of a film actress from acting in films at fixed ... - Issues:Whether the assessee's income falls to be computed under Section 7 or Section 10 of the Indian Income-tax Act.Analysis:The judgment by the Bombay High Court, delivered by CHAGLA, C.J., and TENDOLKAR, J., revolves around the determination of whether the income of the assessee, a well-known film actress, should be computed under Section 7 or Section 10 of the Income-tax Act. The assessee had entered into contracts with various film companies for acting in films at fixed remuneration. The Department contended that the income represented 'Salaries' and should be assessed under Section 7, while the assessee argued that it arose from the practice of her profession as a film actress and should be assessed under Section 10. The Tribunal upheld the assessee's contention. The crux of the issue was whether the relationship between the assessee and the film companies established a master-servant relationship, making her a salaried servant. However, it was argued that in the case of a professional person, temporary engagement for a specific purpose does not equate to exchanging the profession for service. The judgment cited a relevant English case to support this principle.The judgment emphasized that in professions like acting, where engagements are temporary and involve moving from one project to another, each engagement is part of exercising the profession, not a traditional employment relationship. Drawing a parallel, it was highlighted that even when a lawyer engages to conduct a case, they do not cease to practice their profession and become a servant of the client. The court concluded that the assessee, in this case, did not exchange her profession for service with the film companies but entered into temporary engagements to carry out her profession as a film actress. Therefore, her income should be computed under Section 10 of the Income-tax Act, not under Section 7. The judgment answered the reference questions accordingly, with the second and third questions deemed unnecessary. The Commissioner was directed to pay the costs of the reference.In summary, the judgment clarifies the distinction between temporary engagements in a profession and traditional employment relationships, emphasizing that in certain professions like acting, each engagement is part of exercising the profession rather than becoming a salaried servant. This decision provides valuable insight into the treatment of income for professionals engaging in temporary assignments, ensuring that their earnings are assessed under the appropriate sections of the Income-tax Act based on the nature of their profession.