1968 (9) TMI 36 - HC - Income Tax

Expenditure Tax Act, 1957 - assessee incurred expenditure on publication and distribution of educative and informative literature on the subject of emotional liberation between the people of India and Kashmir - held that such expenditure is exempt

Issues Involved:
1. Whether the activities carried on by the assessee constituted a vocation or occupation within the meaning of section 5(a) of the Expenditure-tax Act.
2. Whether the expenditure incurred by the assessee was wholly and exclusively for the purpose of her vocation or occupation.

Issue-wise Detailed Analysis:

1. Constitution of Vocation or Occupation:
The primary issue was whether the activities carried out by the assessee could be classified as a vocation or occupation under section 5(a) of the Expenditure-tax Act, 1957. The Tribunal had previously determined that the activities of the assessee did indeed constitute her vocation or occupation. This conclusion was challenged by the revenue, but the court upheld the Tribunal's view.

The court referred to a prior judgment in Expenditure-tax Reference No. 1 of 1966 (Commissioner of Income-tax v. Ambalal Sarabhai), which established that the absence of a profit-making motive does not exclude an activity from being categorized as an occupation. The court noted, "The word 'occupation' is a word of large and indefinite import and its meaning is not susceptible of any precise or definite formulation." The court emphasized that an activity engaging a person's time and attention with continuity and regularity, as opposed to a momentary or isolated endeavor, constitutes an occupation.

Applying this test to the present case, the court found that the assessee's activities, which included public work and journalism dedicated to national emotional integration, particularly between the people of India and Kashmir, qualified as her occupation. The court stated, "The assessee was devoting her full time and attention to the activities of public work in the cause of emotional integration as also journalism and these activities carried on by her were not momentary nor in the nature of an isolated or semi-occasional and temporary adventure."

2. Expenditure Incurred for Vocation or Occupation:
The second issue was whether the expenditure incurred by the assessee was wholly and exclusively for the purpose of her vocation or occupation. The Tribunal had found against the assessee, suggesting that the expenditure was not strictly personal but rather that of a whole party or organization. However, the court found this conclusion unsupported by any material evidence.

The court observed that there was no evidence to show that the expenditure was for the benefit of any party or organization. The affidavit filed by the assessee indicated that the expenditure was incurred for her activities related to emotional integration between the people of India and Kashmir. The court criticized the Tribunal for being misled by the largeness of the expenditure and for assuming, without evidence, that it was the expenditure of a "whole party or organization."

The court clarified, "If an assessee is sufficiently rich and the work in which he is engaged has become a passion with him and he spends his entire fortune on that work, can it be said that, merely because the expenditure incurred by him is large, it can have no connection with his occupation?" The court concluded that the expenditure was indeed incurred by the assessee wholly and exclusively for the purpose of her occupation.

Conclusion:
The court answered both questions in favor of the assessee. The activities carried out by the assessee were deemed to constitute her occupation within the meaning of section 5(a) of the Expenditure-tax Act, 1957. Furthermore, the expenditure incurred was found to be wholly and exclusively for the purpose of her occupation. Consequently, the Commissioner was directed to pay the costs of the reference to the assessee.

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