Voluntary payments linked to professional services or business ventures can still be taxable income, even without a contract.

Voluntary receipts may still be taxable as income where they are referable to professional services or business activity, even without a prior enforceable contract or express stipulation for remuneration. A payment received by an architect for bringing about a sale was treated as arising from the exercise of his profession and therefore outside the casual and non-recurring receipt exemption. A separate receipt by two assessees from a property transaction was treated as business income because their participation showed a business venture in real estate, including procurement of the purchaser and facilitation of the sale. In both cases, the receipts were held taxable and not exempt under section 4(3)(vii) of the Indian Income-tax Act, 1922.

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Issues: (i) Whether the sum of Rs. 12,333 received by the architect arose from the exercise of his profession so as to be taxable and outside the exemption for casual and non-recurring receipts. (ii) Whether the share of Rs. 12,333 received by the two assessees in connection with the property transaction constituted business income and was likewise outside the exemption.

Issue (i): Whether the sum of Rs. 12,333 received by the architect arose from the exercise of his profession so as to be taxable and outside the exemption for casual and non-recurring receipts.

Analysis: The receipt was held to be connected with the professional skill, contacts, and services of the architect in bringing about the sale of the estate. The absence of a prior enforceable contract or an express stipulation for remuneration did not prevent the payment from being treated as income where it was referable to professional services. A voluntary payment may still be taxable if it accrues by virtue of a profession or vocation.

Conclusion: The amount was income arising from the exercise of the architect's profession and was not exempt under section 4(3)(vii) of the Indian Income-tax Act, 1922.

Issue (ii): Whether the share of Rs. 12,333 received by the two assessees in connection with the property transaction constituted business income and was likewise outside the exemption.

Analysis: The assessees were found to have joined in the transaction as part of a business venture in real estate. Their participation in procuring the purchaser and facilitating the sale showed a conjoint business effort, and even an isolated transaction can amount to business or an adventure in the nature of trade where it is entered into with a view to profit. The receipt was therefore attributable to business activity rather than a casual windfall.

Conclusion: The amount received by the two assessees was business income and was not exempt under section 4(3)(vii) of the Indian Income-tax Act, 1922.

Final Conclusion: The reference was answered against the assessees, and the receipts were held taxable as income arising from profession in one case and from business in the other.

Ratio Decidendi: A payment may be taxable as income even if voluntary and unsupported by an enforceable contract, if it is referable to the recipient's profession, vocation, or business activity and is received by virtue of that source.

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