TaxTMI 
TaxTMI 
1950 (8) TMI 20
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....d from service in June 1941. He was also a Barrister but never practised at the Bar. After retirement he had also no whole time profession, vocation or occupation, when he was leading the life of a pensioner. In September 1941, some 3 1/2 months after his retirement, the Madras Government asked him whether he would find it convenient to serve as an arbitrator for enquiring and reporting about a dispute which had arisen between the District Boards of Krishna and west Godavari in the matter of apportionment of the sale proceeds of the Bezwada-Masuli-patara railway, as the Government proposed to take action under Section 234, Madras Local Boards Act, 1920, and to refer the dispute to an arbitrator for enquiry and report. He was also informed that he would be paid a lump fee of Rs. 3000 for the work and travelling allowance on the scale admissible for High Court Judges. He replied at once agreeing to serve as an arbitrator, and he was appointed arbitrator by a G. O. dated 23-9-1941 which also fixed his lump sum remuneration at Rs. 3000 and travelling allowance on the scale admissible for High Court Judges. He then worked as an arbitrator. Even according to him, the work was quasi-judic....
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....rovision as in the Civil P. C., for the filing of cross-objections; and, further that the respondents had not paid the requisite court-fee for the reference, and that the request was also barred by time, and that the question had not been raised before the Income Tax Appellate Tribunal when it heard Mr. V. P. Rao's case and there appeared to be also no provision of law for awarding costs or interest to the successful party before the Income Tax Appellate Tribunal, So we are not concerned with the other question now and the only question before this Court is the question regarding the taxability of the said Rs. 3000 or the alleged right to be exempted from taxation under Section 4(3)(vii) of the Act. 3. We have perused the entire records and heard the learned counsel on both sides. Before we proceed further, it may be as well to quote Section 4(3) and Section 4(3)(vii), Income Tax Act for understanding the various contentions to be stated presently; Section 4(3) and Section 4(3)(vii) run as follows : "4 (3) : Any income, profits or gains falling within the following classes shall not be included in the total income of the persons receiving them; .... (vii) A....
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....rain Singh v. Commissioner of Income Tax. Their Lordships of the Privy Council have held that the word "income" is not limited by the words "profits and gains" and that anything which can properly be described as "income" is taxable under the Income Tax Act unless expressly exempted. In Rani Amrit Kunwar v. Commissioner of Income Tax, C. P. & U. P. AIR1946All306, a case decided by three Judges of the Allahabad High Court, Braund J. has exhaustively discussed the case-law till 1946 and has finally held : "In short, the English Income Tax Act, by its charging provisions, has taxed only those particular types of income which can be brought within the various schedules whereas the Indian Income Tax Act has charged whatever is income, profits and gains on the proper construction of these expressions." It is obvious that the fee or remuneration of Rs. 3000 got by Mr. V. P. Rao for this work of arbitration would fall within the scope of the word "income" in Section 6; he himself actually showed it in his return of income though he contended that it would be exempt from tax under Section 4(3)(vii). It would at any rate certainly fall within the term "profits and gains" in Secti....
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.... not, which are of a casual and non-recurring nature, within the exemption." 6. We agree with the above observation. 7. Mr. Rama Rao Sahib for the Commissioner of Income Tax agreed that the Rs. 3000, in this case were not receipts arising from business and were not also receipts by way of addition to the remuneration of Mr. V. P. Rao as an employee. He also conceded that the receipts did not arise from the exercise of a profession or vocation, as Mr. V. P. Rao was not by profession an arbitrator. Nor was his vocation arbitration. Mr. Rama Rao Sahib said that 'vocation' would mean, the calling in which a person passes his life adopting the definition in Partridge v. Mallandaine, (1886) 18 Q. B. D. 276 : (66 L. J. Q. B. 251) and he conceded that Mr. V. P. Rao was not passing his life in arbitration. But he strongly contended that the remuneration of Rs. 3000 was a receipt arising from Mr. V. P. Rao's occupation as an arbitrator in the said proceedings, and so he would not claim exemption from taxation under Section 4(3)(vii) of the Act. He further contended that the said fee or remuneration was also not of a casual and non-recurring nature, and that for this reason ....
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....and that the words "exercise of" connoted the existence of a profession or vocation or occupation that a person already pursues, and that, if the person did not follow the profession or vocation or occupation of an arbitrator, a solitary receipt like this from arbitration proceedings engaged in by him could not be said to have arisen from the exercise of an occupation. We cannot agree. The words "from the exercise of" in Section 4(3)(vii) cannot be given the meaning given to it by the Income Tax Appellate Tribunal and by learned counsel for the assessee but must be given the natural meaning in the ordinary English idiom. Very few people speak of receipts arising from the exercise of a business, and only speak of receipts arising from business ; whereas the usual phrase for receipts from a profession, vocation or occupation is "receipts arising from the exercise of a profession, vocation or occupation." If the argument of the Income Tax Appellate Tribunal in its judgment is correct, all the three words, profession, vocation and occupation would mean much the same thing, and the use of the three different words in the Act would be otiose. That is also one of the reasons why we disagr....
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....s of the heirs of the Nawab no stipulation was made for remuneration. He obviously consented to act as he was a friend of the family but; it turned out that the task involved far more time than was anticipated and this was the reason why Gentle J, decided to grant the arbitrators a reward for their services. There was no obligation to remunerate the arbitrators; and if Gentle J. had refused to sanction remuneration nothing would have been payable. In our opinion, the facts of this case show that this is a receipt of a casual and non-recurring nature. It has been said that the assessee may act as an arbitrator in another case. That may be so; but he is not a professional arbitrator and it is very unlikely that he will be called upon to act in a case like the one referred to. There can be no rule laid down with regard to what is of a casual and non-recurring nature. Each case must be decided on its particular facts. We think that in the circumstances of this case the Income Tax Appellate Tribunal took the correct view. Therefore the answer to the question referred is that Rs. 7000 is not assessable." Here Mr. V. P. Rao was a retired High Court Judge, and his agreement to act as an....
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....o pay, or promise to pay or obligation to pay or an expectation of payment, when the work was taken on. That would explain the difference in the view taken in that case. In Hobbs v. Hussey, (1942) 24 T C 153, Lawrence J, held that a sum of money received by a Solicitor's Clerk, who had never carried on the profession of an author, for the serial rights in his life story published in a newspaper called the People was assessable to Income Tax as it was in essence remuneration for the performance of services by him. In this case also, the true nature of the transaction was the performance of service by Mr. V. P. Rao as an arbitrator, and the remuneration for that occupation was agreed already before the occupation was taken on. 11. In Commr. of Income Tax v. Indra Sen [1940]8ITR187(All) Braund J. has remarked as follows : "I should, for myself, be very unwilling to try to lay down any general definition of what a 'business' profession 'vocation' or 'occupation' is, because it is a matter which, to my mind, must necessarily depend in every case upon the circumstances of the assessee the particular things he does, and the degree to which, and the ....
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....mption. 14. In view of all the above considerations, we are satisfied that Rs. 3000 in question in this case arose from the exercise of the occupation of arbitrator by Mr. V. P. Rao, and that therefore, the assessee cannot claim exemption under Section 4(3)(vii) of the Act and the sum would be taxable, as urged by the Commissioner of Income Tax. That would, by itself, be sufficient to reverse the finding of the Income Tax Appellate Tribunal and to declare the sum to be taxable. But for completeness we consider also the contention of the learned counsel for the Income Tax Commissioner, that the receipt of Rs. 3000 would not also be of a casual and nonrecurring nature and could not therefore be exempted on that ground also, though we restrict our finding to the expression "casual" and do not want to go into the more complicated matter of the "non-recurring nature" as distinguished from "non-recurring occurrence." 15. As remarked by the Bench in the 1943 Madras case [1943]11ITR590(Mad) no rule can be laid down with regard to what is of casual and non-recurring nature, and each case must be decided on its particular facts. In the present case, we have no doubt whatever that the r....
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....ved. I think they rightly thought that this was a case assessable under case 6, and accordingly it results that the appeal, in my opinion, fails and must be dismissed." In Ryall v. Hoare, (1921-24) 8 Tax Cas. 521 : (1923-2 K. B. 447) the bankers of a company refused to allow its overdraft to be increased except upon the joint and several personal guarantee of its directors of whom the respondents were two. In consideration of such a guarantee the company granted to each of the directors a commission of two per cent. on the whole amount guaranteed. The respondents contended that the commissions arose from a casual, unsought and exceptional transaction and were not chargeable to Income Tax. It was held by Rowlatt J. that the commissions were not casual profits or gains and had been properly assessed to Income Tax and the judgment was confirmed by the Court of Appeal. Here too, we are satisfied that the receipt of Rs. 3000 by Mr. V. P. Rao as remuneration for his services as arbitrator was not casual, accidental or exceptional, and so on that ground also it could not be exempted from Income Tax under Section 4(3)(vii). 16. In this view, we do not think it necessary to go into th....