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TMI Blog1978 (3) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... e statement of the case sent up by the Tribunal it has furnished a tabular statement showing the assessment years during which the engagements in question were undertaken, the amounts received by the assessee, and the nature of the assignments. For the sake of convenience, we reproduce the said tabular statement : --------------------------------------------------------------------------------------------------------------------------------------------------- Assessment Amount Assignment year --------------------------------------------------------------------------------------------------------------------------------------------------- Rs. 1962-63 12,000 Arbitrator in dispute between Kerala Govt. Cannanore-Tellicherry Electricity. 1964-65 27,375 Arbitrator in Gwalior Rayon's Dispute. 1965-66 16,375 Arbitrator in Gwalior Rayon's Dispute. 1966-67 1,500 -do- 1967-68 2,323 Chairman-Committee for revision of fares of stage carriages. 1968-69 7,645 Chairman-Committee for revision of fares of stage carriages. 15,000 Arbitrator in dispute between Electricity Board and Engineering Employees. 12,250 Commission of Enquiry in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greed to by him and the accredited representative. The order referred to a letter dated June 1, 1961, from the assessee to the Government. The Tribunal stated that the copy of the letter was not produced and that the same was probably a consent letter about the remuneration, to which there was express reference in the Government order. The work commenced in 1961 and, was completed before April, 1962. The remuneration was paid in the financial year 1961-62. (ii) Gwalior Rayons Arbitration--Assessment years 1964-65 to 1966-67-- I.T.A. Nos. 560, 561 and 562/Cochin/72-73. The assessee had been appointed by the Government of India as Chairman of the Railway Rates Tribunal, on a salary of Rs. 3,000 per month, for a period of three years. He assumed duty at Madras on April 2, 1962, and held the post till April 1, 1965. It was in January, 1963, that a dispute between the Gwalior Rayons (P.) Ltd. and one of their contractors arose for settlement by arbitration. The advocate for the company suggested the name of the assessee, who eventually at the persuasion of the advocate, agreed to accept the appointment as arbitrator on a remuneration of Rs. 15,000 calculated at Rs. 1,500 per sitti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an arbitrator who shall be a retired High Court Judge. The assessee was then at Bangalore and was contacted over the telephone by the Chief Secretary to Government and pressed and pursuaded to serve as arbitrator. On his return from Bangalore, he was met by the chairman of the Electricity Board and offered Rs. 15,000 as remuneration which was agreed to by the assessee. The order of appointment was issued by the Board on October 27, 1966, and on the same day followed another order fixing the remuneration of Rs. 15,000 and providing for appointment of the staff of the arbitrator. The work commenced on October 27, 1966, and was completed on April 6, 1967. The remuneration was received during the assessment year 1968-69. (v) Enquiry into the irregularities in awarding contract in the Kerala State Electricity Board-Assessment years 1968-69 and 1969-70. By Government orders dated May 19, 1965, the assessee was constituted as the Commission of Enquiry under the Commission of Enquiries Act, 1952, to enquire into the above irregularities. By a separate order, of even date, the assessee's remuneration was fixed at Rs. 15,000 per month as honorarium besides travelling allowance at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 1972-73. On the above facts let us examine the question of law sent up by the Tribunal which we have set out earlier. Counsel for the assessee referred to the three questions settled for consideration by the Tribunal which were : " (i) Whether the seven items of remuneration specified above or any one of those are receipts of a casual nature ; (ii) Whether such receipts are receipts of a nonrecurring nature ; and (iii) Whether such receipts are receipts arising from the exercise of a profession (vocation or occupation) ? " Strenuous arguments were advanced by counsel for the assessee on all the above questions. Counsel for the revenue objected emphasising the only question which had been referred at the instance of this court under s. 256(2) of the Act. He further pointed out the order of the Tribunal, where, after formulating the three questions arising for consideration, the Tribunal had entered its finding only an point No. 1 to the effect that the remuneration in the seven instances was not of a casual nature (vide paragraph 8 of the order of the Tribunal) ; and left open points 2 and 3 without recording any finding. Counsel for the revenue drew our atte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration of that question was necessary for disposing of the appeal before the Tribunal. Otherwise, any question, unnecessary for the decision of a case which the Tribunal rightly refrained from taking into consideration, can be said to arise from the order of the Tribunal." In the light of the above principle, we agree with counsel for the revenue that questions Nos. 2 and 3 formulated by the Tribunal and not dealt with by it, as unnecessary, in view of its finding on question No. 1, do not arise out of the order of the Tribunal. In view, however, of the strenuousness with which the point was argued by counsel for the assessee, and for the sake of completeness we propose to deal with the question No. 3 formulated by the Tribunal, viz., whether the receipts can be said to arise from the exercise of a profession, vocation or occupation. We might begin our discussion by extracting s. 10(3) of the I. T. Act, 1961, as it stood at the relevant time. " 10. In computing the total income of a previous year (if any person, any income falling within any of the following clauses shall not be included : ...... (3) any receipts which are of a casual and nonrecurring nature, unless t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt of a casual character. It is not, therefore, possible to accept. the argument of the appellant that the receipt of interest obtained under the decree of the Supreme Court of Ceylon was of a casual or non-recurring nature. We accordingly, reject the submission of the appellant on this aspect of the case. " In V. P. Rao's case [1950] 18 ITR 825 (Mad), to which reference would be made more fully, presently, the expression "casual " was explained as it accidental or fortuitous receipts ; occurring without stipulation, contract, calculation or design In Malick's case [1968] 67 ITR 616 (All), also to be fully noticed presently-one of the learned judges (Manchanda J.) observed : The word 'casual' may have several meanings. It may be something which comes in at uncertain times and something which cannot be relied upon or calculated to produce income or it may be something which is the result of chance, or the result of a fortuitous circumstance. One test which has been laid down in some cases is whether the receipt is one which is foreseen, known and anticipated and provided for by agreement. If it is a result thereof then it cannot be described as casual even if it is not like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctfully, concur with the view he has taken on this question and consider that the more correct of two possible opinions is that the receipt in this case was of a casual and non-recurring nature. " The question fell to be considered with respect to the nature of the income derived from betting and racing by maintaining race horses in, Lala Indra Sen, In re [1940] 8 ITR 187 (All) [FB], lqbal Ahmad J. dealt with the question thus : " Neither the word ' casual ' nor the word ' non-recurring ' has been defined in the Act and these words must, therefore, be construed in their plain and ordinary sense. In Murray's Dictionary the word 'casual'is said to mean ' (1) Subject to, depending on, or produced by chance ; accidental, fortuitous. (2) Occurring and coming out at uncertain times ; not to be calculated, or, uncertain, unsettled. (3) Subject to chance or accident. The word ' recurring ' connotes the idea of repetition and of occurring more than once. The winning of a particular horse in a particular race or the winning of bets at the race course is undoubtedly uncertain and a matter of chance, and the receipts from these sources are, in my opinion, therefore, casual. But in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eries of bets on a prescribed plan. He was free to stop whenever he liked. And if each bet is, as I think, an individual transaction, I can myself see nothing of a ' recurring nature ' about it. It was not its nature to recur. If it did in fact recur with great frequency it might on that account become a ' business '. It may be true that, in fact, these bets did recur. But that was not the result of the 'nature' of the transaction but of the mere spasmodic volition of the assessee. They were not, to my mind, of a recurring ' nature ' and the assessee has not shown us that in this case they did recur in such a way as to constitute them a ' business '. I think also, upon this line of reasoning, that they were 'casual '--'casual ' in the sense that they were merely arbitrary acts dictated by the assessee's mood at the time of making them and following no set course of dealing. Nor call it be denied that whether or not any particular bet yielded a profit was a mere matter of chance. Whether the chance was a good chance or a poor chance (or, in other words, whether the odds were short or long), a chance it remained and, in that sense, its proceeds were, I think, mere 'casual' receipts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment--if not express, but implicit that for the services rendered the nominees, at the instance of the distribution committee, will pay a certain amount to the Association. Under these circumstances, in our opinion, it is impossible to urge that the income received by the Association because it happened to be for a short duration and because it happened to be only once in the history of the Association, becomes a casual and non-recurring income." We have refrained from citing English decisions in view of the caution administered against transplanting into the Indian conditions and the provisions of the Indian statute, the principles laid down with respect to the English Act. Applying the principle of the decisions noticed, we are clearly of the opinion that the Tribunal was right in its conclusion that the receipts by the assessee in the seven instances mentioned by us were not receipts of a casual nature. The remuneration in each of the seven cases was fixed and agreed upon between the assessee on the one hand, and either the Government, or the Kerala State Electricity Board or the party or authority which required the assessee's services, on the other. We are by no means sayin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble guide, they are of assistance in interpreting the words under consideration. The word ' business ' has also been interpreted in two decisions under the Indian I.T. Act." Further on, the learned judge observed at page 204 : " It would appear from this observation that the word ' occupation ' is a word of wider import than the word ' profession '. In Partridge v. Mallandaine [1887] 18 QBD 276 (QB), the word ' vocation ' was held to be ' analogous to " calling ", a word of wide signification meaning the way in which a man passes his life'. " The learned judge wound up his discussion thus : " It is obvious that the words ' business ', ' profession ', ' vocation ' and 'occupation ' have been used in s. 4(3)(vii) in contradistinction to each other and, having regard to the scheme of taxation underlying the Act, the conclusion is irresistible that the word ' profession ' is of wider import than the word ' business ' and the word ' vocation ' is of wider import than the word ' profession ' and lastly ' occupation ' is a word of wider signification than the word ' vocation '. In other words, what may not amount to business may amount to profession and what may not amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed ...... The word " occupation " has reference to the principal or regular business of one's life...... The word particularly refers to the vocation, profession, trade, or calling which a person is engaged for hire or for profit, and it has been repeatedly held that a person's principal business and chief means of obtaining a livelihood constitutes his occupation. The term " occupation " expresses the idea of continuity ; a continuous series in transactions....... and implies regularity in a specific line of endeavour. Furthermore, time is a necessary ingredient, and, although it need not be protracted, it must not be momentary. As generally understood, the term does not include an isolated or semi-occasional and temporary adventure in another line of endeavour, and does not extend to acts and duties which are simply incidents connected with the daily life...... A person may engage in more than one occupation....... or he may engage in two occupations at the same time, as where he carries on his chief occupation and also another as a side line.' It may be debatable whether the idea of continuity or regularity is a necessary ingredient of the concept of ' occupation ' and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JJ.) observed that the receipt cannot be said to be of a casual nature, left open the question whether it was of a non-recurring type ; and, for the sake of completeness, considered further, whether it could be said to be income arising from a business, profession or occupation. The learned judges were of the view that it was income arising from an occupation. The question was considered with respect to, s. 4(3)(vii) of the Indian I. T. Act, 1922, substantially in similar, if not in identical terms as s. 10(3) of the 1961 Act. The learned judges stated that no rule can be laid down with regard to what is of a casual and non-recurring nature and each case has to be decided on its particular facts. It was observed that the word "casual " applied only to accidental or fortuitous receipts ; occurring without stipulation, contract, calculation, or design-something in the nature of an unforeseen windfall. Viewed from that angle, the learned judges noticed the observation of Rowlatt J. in Ryall v. Hoare [1923] 8 TC 521 (KB), which referred to the case of a lump sum remuneration granted, inter alia, to a retired judge appointed to hold an important arbitration in connection with the London ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years. Malick J. became the Chief Justice of the Allahabad High Court in 1947. He was informed in 1949 that difference had occurred between the arbitrators and that it was necessary for him as umpire to enter upon the reference. In view of the changed situation by reason of his having become the Chief Justice, Mr. Justice Malick was unwilling to take up the assignment and wrote expressing his inability. At about that time matters were further complicated by the sudden death of one of the arbitrators, Sri Sarat Chandra Bose, from heart failure. Persuasion from the high quarters, including a personal letter from the late Sri Shyama Prasad Mukherji, led Mr. Justice Malick to enter upon the reference as umpire. On 8th May, 1950, Sri Shiv Charan Singh wrote to Malick C.J. to indicate the fee. This was done by letter dated May 11, 1950. His work commenced on May 15, 1950, and concluded on May 26, 1950. A remuneration of Rs. 20,000 was sanctioned to the Chief Justice for his work as umpire. There was a confidential letter of the Government of India prohibiting remuneration to a sitting judge of a High Court for doing judicial work except with the consent of the President. Exemption from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time and effort must have been expended in receiving it. If the ambit of the term 'occupation' is to be cut down, I would interpret it as word used ejusdem generis with, the preceding words. In other words, the idea of an engagement in an activity as one's ordinary or habitual or usual, or principal work in life or source of livelihood cannot be dissociated completely from the term 'occupation' as used in s. 4(3)(vii) of the Act. I am, therefore, unable to agree with the view taken by the Madras High Court in V. P. Rao's case [1950] 18 ITR 825. The mere fact that a person agrees to give his time and energy to the performance of some work or to exert himself, so that some monetary gain results from it in the form of a receipt of money, is not sufficient to convert the gain into a receipt resulting from the 'exercise' of an 'occupation' or to deprive it of its character as a casual and non-recurring receipt where that has been proved. " The other learned judge, Manchanda J., at page 630, observed that the question whether the receipt was from the exercise of an occupation was not free from difficulty, in view of the decision of the Supreme Court in Krishna Menon's case [1959] 35 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umpire or arbitrator. The arbitration was accepted by him as a result of pressure and the claim of public interest which was placed before him in order to induce him to accept the arbitration. M. H. Beg J., who agreed with Manchanda J., said that the word ' casual ' as defined in the third edition of Webster's New International Dictionary meant as follows : ' subject or produced as a result of chance ; without design ; not resulting from plan ; without specific motivation, special interest or constant purpose; without foresight, ; an or method : occurring, encountered, acting or performed without regularity or at random ; ' occasional '. In the present case also the premises occupied by the assessee did not belong to him. He was a tenant. His family was already away in the U.K. for about 8 months. When he was about to leave the country he was contacted by Shri O. P. Singhal of the United States of America and he gave his house to two Americans on a caretaker basis and was paid a sum of Rs. 3,000 for that purpose. This was the first and the last time on which he gave his house to two foreigners for a short period. He could not sublet the property and, therefore, there was no rental ..... X X X X Extracts X X X X X X X X Extracts X X X X
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