1967 (1) TMI 28 - HC - Income Tax

Assessee's Rs. 20,000 not taxable under Indian Income-tax Act

The court held that the sum of Rs. 20,000 received by the assessee was not revenue income liable to tax under the Indian Income-tax Act. The receipt did ... Assessee received Rs. 20,000 as arbitration fee - sum received was a casual and non-recurring item of income which cannot be related to the exercise of any profession, vocation or occupation by the assessee- sum of Rs. 20,000 received by the assessee as remuneration was not revenue income Issues Involved:1. Whether the sum of Rs. 20,000 received by the assessee as remuneration was revenue income liable to tax under the Indian Income-tax Act.2. Whether the receipt was from the exercise of a profession, vocation, or occupation.3. Whether the receipt was of a casual and non-recurring nature.Issue-wise Detailed Analysis:1. Revenue Income Liability:The primary question was whether the sum of Rs. 20,000 received by the assessee was revenue income liable to tax under the Indian Income-tax Act. The Tribunal found that the sum was for rendering some service and was therefore income liable to tax. They held that the source of the income was the service rendered by the assessee, and the receipt was remuneration for the exercise of an 'occupation.' The Tribunal also noted that the payment was anticipated, thought of, stipulated for, and was not casual nor a mere windfall.2. Exercise of Profession, Vocation, or Occupation:The court analyzed whether the receipt arose from the exercise of a profession, vocation, or occupation. The terms 'profession,' 'vocation,' and 'occupation' were not explicitly defined in the Act. The court referred to various definitions and previous judgments to interpret these terms. It was noted that a sitting judge could not have a 'profession' due to constitutional restrictions. The court also examined whether the assessee's acting as an umpire could be considered a 'vocation' or 'occupation.' The court concluded that the assessee's acting as an umpire was a solitary transaction and did not constitute a regular occupation or vocation. The court emphasized that some regularity or continuity is necessary to constitute a 'vocation' or 'occupation.'3. Casual and Non-Recurring Nature:The court examined whether the receipt was of a casual and non-recurring nature. The court noted that the receipt was a solitary instance and was not part of a regular or recurring activity. The court also considered the peculiar circumstances under which the assessee agreed to act as an umpire, including the personal appeal by the late Sardar Patel and the special exemption made in his favor. The court concluded that the receipt was casual and non-recurring, as it was not a result of any regular or continuous activity.Conclusion:The court held that the sum of Rs. 20,000 received by the assessee was not revenue income liable to tax under the Indian Income-tax Act. The receipt did not arise from the exercise of a profession, vocation, or occupation and was of a casual and non-recurring nature. Therefore, the question was answered in the negative and against the income-tax department. The costs of the reference were assessed at Rs. 250, and counsel's fee was also assessed at Rs. 250.