TMI Blog1975 (9) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Constitution. During the assessment year 1969-70, be received a sum of Rs. 11,000 and during 1970-71 a sum of Rs. 3,000 by way of fees for the professional services rendered by him during the period prior to his appointment as a judge of the High Court. The Income-tax Officer assessed these amounts to tax. No appeal was filed before the Assistant Commissioner of Income-tax. The petitioner, however, filed a revision petition before the Commissioner of Income-tax under section 264 of the Act. The Commissioner of Income-tax did not accept the contention of the petitioner that the fees for the professional services rendered by him earlier as an advocate but received while he was a judge of the High Court, when he was not carrying on the profession of an advocate, was not chargeable to tax, and dismissed the revision petition by his order dated October 31, 1972. In this petition, it is contended that on the facts and circumstances of the case section 176(4) is not attracted. Mr. Dasaratharama Reddy, the learned counsel for the petitioner, contends that the petitioner cannot be said to have discontinued his profession of an advocate ; he merely suspended his profession on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t should be assessed. " The court also rejected the contention that the receipts had to be included in the total income as stated in section 4, and since they do not fall under any of the exceptions mentioned in that section, these receipts are liable to tax and that, therefore, they must be considered as income under the residuary head as they could not otherwise be brought to tax. The court went on to hold that section 12 deals with income which is not included under any of the preceding heads. If the income is so included under any of these heads, it would fall outside section 12. Whether an income is included under any of the preceding heads or not would depend on what kind of income it was. It follows that if the income is "profits and gains of profession", it cannot come under section 12. Section 12 does not say that an income which escapes taxation under a preceding head will be computed under it for chargeability to tax. It only says--and this is most important--that an income shall be chargeable to tax under the head "other sources", if it does not come under any other head of income mentioned in the Act. Having regard to the above conclusion, the court then proceeded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Officer notice of such discontinuance within fifteen days thereof. (4) Where any profession is discontinued in any year on account of the cessation of the profession by, or the retirement or death of, the person carrying on the profession, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the aforesaid person had it been received before such discontinuance....... " Under sub-section (4) of section 17 6 provision is made to include any sum received by a person after he has discontinued the profession as income of the recipient and charged to tax accordingly in the year of receipt on certain conditions. Primarily such sum was to be included in the total income of that person and was exigible to tax, if it was liable to be included, had it been received before such discontinuance. Further, for becoming exigible to tax the discontinuance of the profession should have been on account of : (1) The cessation of the profession by the person ; (2) the retirement of the person ; or (3) the death of the person. Mr. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. According to the learned counsel, section 176(4) occurring under the head "Discontinuance of business, or dissolution, in the context could only mean discontinuance of business or profession wholly. The discontinuance should be of a permanent character and should not be a temporary discontinuance of profession which may be resumed later. Such temporary discontinuance would constitute suspension of the profession and not discontinuance of the profession in the strict sense of the term. I am unable to agree with this contention. Discontinuance of a profession or business may be either temporary or permanent. It may be for a short or long duration. "Discontinuance" is defined as "to cease to continue, to put an end to, to leave off, to stop, to cease, to be separated". All that it indicates is that the profession or business is stopped. But the length of time for which it is stopped is not one of the elements that enters into the concept of discontinuance. It is only the factum of stoppage that is relevant. Further, the discontinuance that is contemplated by sub-section (4) of section 176 is discontinuance on account of cessation of the profession by the person or by retirement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng been arrested for his political activities and detained for several years, received certain income during the period when he was not practising on account of his detention in jail. The question arose whether that income was income from profession. There it was contended by the revenue that there was no discontinuance of profession, but only suspension of profession and as such the assessee was not entitled to claim exemption of this income from tax. The court held that whether a man discontinues his practice or suspends it very largely depends upon the state of his mind and that is to a very large extent, if not altogether, a question of fact. But even while so holding for the purpose of application of section 25(3), Justice Chatterjee held : " I cannot accede to the argument of Dr. Gupta that there must be a complete cessation of the profession for the rest of a man's life in order to constitute discontinuance of a profession. If a member of the legal profession after giving up his profession and closing down his professional establishment changes his mind some years later and resumes practice then there was no discontinuance because according to the revenue authorities disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome would have been exigible to tax if the person had continued in profession and it should not escape the liability of tax on account of that person discontinuing the profession, then the fact whether the discontinuance is temporary or permanent cannot have any bearing on the question of exigibility to tax. Mr. Rama Rao, the learned counsel for the revenue, placed reliance upon a decision of the Calcutta High Court in Roma Bose v. Income-tax Officer and contended that, irrespective of whether the discontinuance of the profession was temporary or permanent, the income of the petitioner was liable to be included under the head "Income from other sources" and, therefore, the assessment is correct. The learned single judge held that : " Under section 14 of the Income-tax Act, 1961, income and not heads of income, as under section 6 of the Act of 1922, has been made chargeable to income-tax. If an income cannot be charged to income-tax under any of the heads mentioned in classes A to E of section 14 of the 1961 Act, the same shall be chargeable to income-tax under the head 'Income from other sources' mentioned in class F of the said section 14, under the express provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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