Director's foreign-tour reimbursement treated as taxable income; casual receipt exemption denied because the payment arose from occupation.

A company's payment for a director's foreign tour, including expenses of the director and his wife, was treated as taxable income because section 2(6C)(iii) extended the definition of income to benefits or perquisites conferred by a company on a director. The court held that the substance of the receipt, not the form of advance or reimbursement, controlled the analysis, and rejected the argument that directorial status had to be specially linked or that substantial shareholding was required. It also held that a director may be engaged in an occupation, so the payment did not qualify as a casual, non-recurring receipt exempt under section 4(3)(vii).

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Issues: (i) Whether the amount paid by the company for the foreign tour of the director and his wife constituted income in the hands of the director under section 2(6C)(iii) of the Income-tax Act, 1922; (ii) Whether the amount was exempt as a casual and non-recurring receipt not arising from the exercise of a profession, vocation or occupation under section 4(3)(vii) of the Income-tax Act, 1922.

Issue (i): Whether the amount paid by the company for the foreign tour of the director and his wife constituted income in the hands of the director under section 2(6C)(iii) of the Income-tax Act, 1922.

Analysis: The definition of income in section 2(6C)(iii) was treated as an extended definition covering the value of any benefit or perquisite obtained from a company by a director. The payment was made by the company pursuant to a resolution authorising the foreign tour and meeting the expenses of the director and his wife. It was immaterial whether the amount was received as advance or reimbursement, because the substance of the receipt was a benefit conferred by the company on its director. The Court rejected the contention that the clause applied only where the benefit was expressly granted because of directorial status or only where the director had substantial interest in the company.

Conclusion: The amount constituted income in the hands of the assessee under section 2(6C)(iii), and this issue was decided against the assessee.

Issue (ii): Whether the amount was exempt as a casual and non-recurring receipt not arising from the exercise of a profession, vocation or occupation under section 4(3)(vii) of the Income-tax Act, 1922.

Analysis: The Court held that being a director could amount to an occupation, even if it was only part-time and distinct from a profession, vocation, trade or business. The legislative phraseology was read broadly to include varied forms of activity and not merely a full-time calling. Since the payment arose from the director's occupation, the receipt did not fall within the exemption for casual and non-recurring receipts received otherwise than from business, profession, vocation or occupation.

Conclusion: The exemption under section 4(3)(vii) was unavailable, and this issue was decided against the assessee.

Final Conclusion: The sum of Rs. 29,793 was taxable in the assessee's hands, and the reference was answered in favour of the Revenue.

Ratio Decidendi: A payment made by a company to its director constitutes taxable income where it is a benefit conferred by the company, and such receipt is not exempt as casual income if it arises from the director's occupation.

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