TMI Blog1970 (2) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ces. In the present case the facts show that from the year 1952 onwards, the assessee, Sri P. V. G. Raju, adopted " politics " as a career and to him, therefore, it was an occupation. The further question is whether the amount spent by the assessee towards the election of candidates set up by him can be considered to, be expenditure incurred wholly and exclusively for the purpose of his occupation. We are of opinion that, in the peculiar circumstances of the case, it can be so considered. During the relevant period the assessee was the chairman of the Socialist Party of the State. He had made politics his career. The candidates whose election expenses he bore were set up by him. The success of the candidates set up by him was necessary for the success or advancement of the assessee's political career. It is, in these circumstances, that we hold that the expenditure incurred by the assessee was incurred by him wholly and exclusively for the purpose of his occupation. We, however, hasten to add that we do not mean to lay down that whenever a politician incurs expenditure for the benefit of other candidates he is doing so wholly and exclusively for the purpose of his occupation. Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-tax Officer rejected this claim also. In rejecting the contention of the assessee, the Expenditure-tax Officer held that politics cannot be called a " vocation " and that there is no evidence that the amounts debited under the head " party expenses " was actually employed for this purpose. Lastly, it was contended that only the expenditure from April 1, 1957, to March 31, 1958 must be taken into account for the purpose of the assessment and not the expenditure incurred between July 1, 1956, to, June 30, 1957. The Expenditure-tax Officer took the view that the petitioner had adopted the Fasli year July 1, 1956, to June 30, 1967, as the " previous year " and, therefore, could not claim that the expenditure between April 1, 1957, to March 31, 1958, should be taken into account for the purpose of assessment and, accordingly, rejected his claim. On appeal by the assessee, the Appellate Assistant Commissioner agreed with the Expenditure-tax Officer that the Fasli year, viz., July 1, 1956, to June 30, 1957, was properly adopted as the " previous year " for the purpose of assessment. Before the Appellate Assistant Commissioner, the assessee sought to sustain his claim for deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with section 3 of the, Expenditure-tax Act, the " previous year " of the assessee was rightly adopted as the period from July 1, 1956, to June 30, 1957 ? " In this reference Mr. Subramanya Reddy, learned counsel for the assessee, strenuously contended that the Tribunal having come to the conclusion that politics was the occupation of the assessee, it ought to have allowed the claim of the assessee with regard to the expenditure incurred by him towards the election of the candidates set up by him as the Chairman of the State Socialist Party and the expenditure incurred by him for the " party ". These two items of expenditure ought to have been treated as expenditure incurred for the purpose of the occupation carried on by the assessee. Alternatively, it was contended that these two items of expenditure could also be treated as donations or gifts to the particular candidates or to the party and as such exempt under section 5(j) of the Act. In order to appreciate these contentions, it is necessary to read certain provisions of the Act. Clause (h) of section 2 of the Expenditure-tax Act defines as follows: " 2. (h) 'Expenditure', means any sum in money or money's worth, spent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airman of the State Socialist Party. As the Chairman of the said Socialist Party he had put up other candidates at the election to contest for the membership of the Legislative Assembly. Although the Expenditure-tax Officer and the Appellate Assistant Commissioner did not think that the assessee's activities constituted an occupation, the Tribunal was of the view that the assessee had taken up politics as a career and that it did constitute an occupation within the meaning of section 5(a) of the Act. The Shorter Oxford English Dictionary defines " occupation " as " the taking up of space or time. The being occupied with, or engaged in something ; that in which one is engaged ; employment, business. A particular action or course of action in which one is engaged ; an employment, business, calling ". Such activity need not be carried on with a view to earn any profit. In P. Krishna Menon v. Commissioner of Income-tax , it was held by the Supreme Court that " in order that an activity might be called a vocation it was not necessary to show that it was an organised activity and that it was indulged in with a motive of making profit. " The word " occupation " is a word of wider import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sarabhai, of the Gujarat High Court, Bhagwati, Chief Justice, speaking for the Bench, observed ; " .... that the object of the enactment of the Expenditure-tax Act was to impose an annual tax on personal expenditure so that it might discourage excessive personal expenditure and encourage savings. The non-personal expenditure incurred by an assessee was, therefore, sought to be excluded and that was done by enacting, inter alia, the exempting provisions of section 5. Section 5(a) exempted expenditure incurred by an assessee wholly and exclusively for the purpose of business, profession, vocation or occupation carried on by him or for the purpose of earning income from any other source, for such expenditure would be clearly non-personal expenditure. Now it is significant to note that, in enacting this exemption, the legislature did not restrict itself to the well-worn formula 'business, profession or vocation' employed in the Income-tax Act but enlarged it by adding a word of large connotation, namely, 'occupation'. The legislative intent clearly was to bring within the scope and ambit of the exempting provision non-personal expenditure incurred by an assessee in connection with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be deemed to be carrying on the occupation of a politician in engaging himself in such activity, such expenditure could not be excluded for the purpose of determining the tax liability. The Expenditure-tax Officer held that expenditure incurred for other candidates cannot be allowed and that expenditure incurred for the election of the assessee could alone be allowed. As already noticed, the Tribunal held that the assessee had taken up politics as a career and that amounted to an occupation. But it was of the view that the expenditure incurred for the other candidates cannot be held to have been wholly and exclusively incurred for the purpose of the " occupation " of the assessee. Mr. Anantha Babu, learned counsel for the department, in support of the contention that in order that the exemption may be allowed the expenditure should not only have been incurred for the purpose of occupation of the assessee, but that it should have been wholly and exclusively incurred for the purpose of the said occupation, relied upon the decision in Union Cold Storage Co. Ltd. v. Jones . Pollock M. R., considering the question whether for the purpose of assessment of its profits and gains to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t leader at least in the State and, as the Chairman of the party, it was his primary objective to see that as many candidates as possible are set up and elected to the legislature. The occupation of a person, situated as the assessee was, did not cease with his own election. As Chairman he was concerned with the election of other persons as well. He was as much concerned with the election of other candidates set up by him as he was with his own. It was part of his occupation to see that the candidates set up by him are successful and any expenditure incurred for that purpose cannot be deemed to be in any way unconnected with the occupation carried on by him. The expenditure incurred by an assessee carrying on an occupation of which exemption may be claimed under section 5(a) is not expenditure incurred for his person ; all that is required is that it must be an expenditure incurred by the assessee wholly and exclusively for the purpose of the occupation carried on by him. An amount of Rs. 16,807 was allowed by the Tribunal as expenditure incurred by the assessee for the purpose of his election. That expenditure as well as the expenditure incurred on the other candidates set up by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion " implies absence of consideration and transfer of title and control without power of revocation. It has been defined as " an act by which the owner of a thing voluntarily transfers the title and possession of the same from himself to another without any consideration ; a gift or grant in gratuity ; gift, gratuitous transfer of property from one to another, or voluntary alienation of property. Also that which is given or bestowed ; and in a particular connection, a gratuitous present of the public funds . . . . " Dealing with the expression " by way of use " in clause ( j ) of section 5 of the Expenditure-tax Act, with reference to the gift, which would also equally apply to " donation ", in Prince Azam Jah v. Commissioner of Income- tax , Jaganmohan Reddy C.J. (as he then was), speaking for the Bench, observed : " The words ' by way of in section 5(j) of the Expenditure-tax Act indicate that the exemption is given to the expenditure incurred by the assessee by way of any gift and also to the gift itself. The amounts relinquished by the assessee in favour of his sons being gifts within the definition of section 5(j) of the Expenditure-tax Act were exempt from expenditure-t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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