TMI Blog1970 (3) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Officer who assessed the respondent as an individual. As a consequence of this information received by the Income-tax Officer in regard to the respondent, action under section 34(1) of the Income-tax Act, 1922, was initiated against the respondent wherein it was alleged that this amount of Rs. 29,793 was taxable in the hands of the respondent but had escaped assessment inasmuch as in the return filed by the respondent for the relevant year as an individual the receipt of this amount had not been shown. The Income-tax Officer by his order dated 31st January, 1962, taxed this amount in the hands of the respondent holding that it was his income within the meaning of section 2(6C)(iii) of the Income-tax Act, 1922. The Income-tax Officer repelled the contention of the respondent that the provisions of section 2(6C)(iii) were not attracted unless the director concerned holds substantial interest in the company. Aggrieved by this assessment the respondent filed an appeal which was disposed of by order dated 5th October, 1962, passed by the Appellate Assistant Commissioner of Income-tax, D-Range, New Delhi. Before the Appellate Assistant Commissioner two contentions were raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that Shri J. Dalmia, managing director of the company, be and is hereby authorised to advance him necessary amount out of the funds of the company as he finds necessary " ; (ii) a sum of Rs. 29,793 was paid to the respondent by the company. A part of this amount was paid by way of reimbursement but it is not clear whether the balance was paid by way of reimbursement of the expenses incurred by the respondent or were paid to him in advance ; (iii) the amount of Rs. 29,793 was claimed by the company as its expenditure but was disallowed ; (iv) that in pursuance of an information received by the Income-tax Officer proceedings were started under section 34(1) of the Act of 1922 in respect of assessment of the respondent as an individual for the assessment year 1957-58, whereby this amount of Rs. 29,793 was added to the income of the respondent and he was reassessed and called upon to pay tax on the amount which had escaped assessment ; (v) the respondent is a director of M/s. Hari Brothers (Private) Ltd., but was not a full-time director of that company ; and (vi) that in his foreign tour the respondent did not act for or do any work for the company and that he and his wif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable by the director or other person aforesaid ; (iv) any sum deemed to be profits under the second proviso to clause (vii) of sub-section (2) of section 10, and any sum deemed to be profits and gains under sub-section (2A) of that section or under sub-section (5) of section 12 ; (v) any sum deemed to be profits and gains of business, profession or vocation under sub-section (5A) of section 10 ; (vi) any capital gain chargeable under section 12B ; (vii) the profits and gains of any business of insurance carried on by a mutual insurance association or by a co-operative society computed in accordance with rule 9 in the Schedule. " On a reading of this section it is clear that the legislature has extended the meaning of the word " income " and has not let it remain restricted to the connotation of that word. In a taxing statute definitions have to be strictly construed and if on a reading of the relevant provision it is clear that the legislature wished to include in the definition concepts different from the ordinary notions, the meaning as intended by the relevant provision would have to be given to the word sought to be defined. From a reading of the above provisions th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit within the ambit of the definition of "income ". Mr. Mitra invited our attention to a number of cases to which we may now advert. He first referred to the decision in Herbert v. McQuade. In this case the question that arose was that when grants are made to a clergyman in augmentation of the income of his benefices from a sustentation fund the said amount would be assessable in the hands of the clergyman as profits accruing to him by reason of his office. The relevant provisions of the statute in England provided that the duties granted in the schedule shall be assessed and charged on persons respectively having, using or exercising the office or employments of profit mentioned in Schedule " E " to the British Income-tax Act, 1842, and further laid down that annuities, pensions or stipends mentioned in the same schedule shall be payable for all salaries, fees, wages, perquisites or profits whatsoever accruing by reason of such offices, employments or pensions. Construing these provisions the Master of Rolls held that the amount paid to the clergyman was by virtue of his office and so assessable. Accordingly this case does not help the respondent at all. The next case refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be added to the income may even be such which is not convertible in terms of money. Accordingly, we negative the contentions raised on behalf of the respondent that the receipt of the amount was not a benefit within the meaning of section 2(6C)(iii). Mr. Mitra also contended that on a reading of sub-clause (iii) of sub-section (6C) of section 2 the words " who has a substantial interest in the company " in clause (iii) of sub-section (6C) of section 2 qualified not only " any other person " but also the words " a director ". A plain reading of the provision does not justify this interpretation. In a taxing statute the obvious meaning has to be taken note of and the words should not be stretched. Having held that the benefit in question would be income it has to be seen whether the same is taxable in the hands of the respondent. All income received by a person is not taxable. The charging sections in the Act of 1922 are sections 3 and 4 and only such income as has been provided to be taxable by these provisions can be assessed to tax. Section 4 of the Act of 1922 clearly lays down that the total income of any previous year of any person includes all income, profits and gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been incorporated in Corpus Juris Secundum. A person may have a whole-time occupation or a part-time occupation. He may follow one particular occupation to earn his livelihood, but yet may employ part of his time and energy in doing something else also. If he does so, then the other matter in which he engages and devotes time and effort would be an occupation though such an occupation would be quite distinct from his employment, vocation, trade, profession, business or calling. The legislature when it dealt with the words "business, profession, vocation or occupation " intended to bring in all aspects of a person's activity as distinct from a chance pursuit. We, therefore, hold that the amount received by the respondent was in the exercise of an occupation. In this view of the matter whether the receipt was a casual or non-recurring receipt becomes immaterial. It is only casual and non-recurring receipts which an assessee receives otherwise than by pursuit of his business, profession, vocation or occupation which can fall within the exception contemplated by section 4(3)(vii) and not others. So, the consideration of whether the receipt in question was casual and non-recurring does ..... X X X X Extracts X X X X X X X X Extracts X X X X
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