TMI Blog1943 (10) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... t for their opinion and we therefore proceed to submit the following statement of the case to the High Court for their opinion under Section 66(1) of the Indian Income-tax Act. 2. The respondent to this application appealed before the Income- tax Appellate Tribunal against the order of the Appellate Assistant Commissioner, Madras. The respondent had prayed that the sum of ₹ 7,000 which has been included by the officers below in the assessment was not an income arising from a trade or business and was also of a casual and non-recurring nature and as such exempt under Section 4(3)(vii) of the Act. This Bench of the Tribunal came to the conclusion that the contention was right and that the sum of ₹ 7,000 received a remuneration for management and arbitration could not be said to arise from the carrying on of a business, profession, vocation or occupation and was an income casual in its nature and was not liable to tax being exempt under Section 4(3)(vii) of the Income-tax Act. The Appellate Assistant Commissioner, it may be pointed out, by a supplementary order, dated 15th November 1941, considered the question and this was duly considered by us. 3. One Nawab C. Abdu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Commissioner and the following observation was quoted by the Appellate Assistant Commissioner:- In taking the view we do, we found overselves mainly upon the use of the word 'nature' in the exemption. The word is not 'occurrence.' If the language were 'a casual or non-recurring occurrence,' there would be much to be said for the contention of the assessee. But the expression 'nature' appears to us to be a word used independently of the accident of the event happening in fact once only or more often in a fortunate year. It connotes a class of dealing which might occur only once, but which might occur several times. Now the adventure of a businessman who is enabled through his business associations to negotiate a large transaction and thereby to earn a heavy commission, may undoubtedly be in fact non-recurring in the sense that so successful an adventure would not be likely to occur again. But on the other hand it is a class of transaction which might occur to any such businessman once only or half a dozen times again, during the course of the year. The Appellate Assistant Commissioner came to the conclusion that the respondent was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occupation, and (ii) that it was income of a casual and non-recurring nature. It may be pointed out that there is no res judicata or estoppel in the income-tax proceedings and what was decided in the previous assessment will not debar us from considering if the amount appears to be exempt from taxation. The Appellate Assistant Commissioner in repelling the argument of the appellant observed as follows:- In this case the petitioner is a graduate and was a member of the Provincial Legislature. He is a person of influence and held in regard by the members of his community and has had large experience in business. On account of these qualifications he was selected as an arbitrator for the administration of the Nawab's estate. Admittedly he has performed such duties in the past by way of social obligations and it is quite probable that he might be called upon in future to hold similar Office. Therefore, the remuneration he received as an arbitrator in this case might happen again. In this sense the income is of a recurring nature and does not come under the exemption contemplated in Section 4(3)(vii) of the Act. The amount has been rightly included in the assessment. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hink this receipt of remuneration should not be taxed as the appellant's income. 3. The result is that we allow this claim of ₹ 7,000 and order it to be deleted from the assessable income of the appellant and confirm the order of the Appellate Assistant Commissioner in regard the disallowance of the claim of loss of ₹ 10,886 in a partnership concern. K. V. Sesha Aiyangar, for the Commissioner C. Srinivasan and C. Devarajan, for the assessee JUDGMENT LEACH, C.J.-- The assessee is a merchant dealing in hides and he carries on his business in the City of Madras. In the year 1938 one Nawab C. Abdual Hakim died, leaving a large estate. Disputes arose among the heirs with regard to the division of the properties left by the Nawab. The result was that the heirs chose five gentlemen of the same community to act as arbitrators and assist in the distribution of the assets. The assessee was one of the five gentlemen, who have been referred to in these proceedings as the arbitrators. The arbitrators did a considerable amount of work in connection with the administration of the estate, and when at a later stage there were proceedings in this Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Now it is clear that the ₹ 7,000 is not a receipt arising from the exercise of a profession, vocation or occupation. As we have already pointed out, the assessee is a merchant dealing in hides and his agreement to act as an arbitrator was entirely apart from his business. When he agreed to assist in settling the differences of the heirs of the Nawab no stipulation was made for remuneration. He obviously consented to act as he was a friend of the family; but it turned out that the task involved far more time than was anticipated and this was the reason why Gentle, J., decided to grant the arbitrators a reward for their services. There was no obligation to remunerate the arbitrators and if Gentle, J., had refused to sanction remuneration nothing would have been payable. In our opinion the facts of this case show that this is a receipt of a casual and non-recurring nature. It has been said that the assessee may act as an arbitrator in another case. That may be so; but he is not a professional arbitrator and it is very unlikely that he will be called upon to act in a case like the one referred to. There can be no rule laid down with regard to what is of a casual and non-recurring ..... X X X X Extracts X X X X X X X X Extracts X X X X
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