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C. Rajagopalachariar Versus Commissioner of Income-tax

1961 (12) TMI 98 - High Court Of Madras

TAX CASE NO. 38 OF 1959 - Dated:- 4-12-1961 - Jagadisan And Srinivasan, JJ. JUDGMENT Jagadisan, This is a reference under the Indian Income-tax Act and the question referred for decision is whether on the facts and in the circumstances of this case the sum of ₹ 5,605 is taxable. The petitioner claims that this amount is exempt from taxation under section 4(3)(vii) of the Indian Income-tax Act, which reads as follows : "Any receipts (not being capital gains chargeable according to the .....

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as State. He has all along been an author of books and a writer of great repute. His books and writings are widely read not merely in this country but throughout the globe. In his return of income under the Indian Income-tax Act for the assessment year 1956-57, he showed the following receipts : Rs. Kalki for the year 1953-54-55 … 5000.00 Kannan, Kalaimagal ... 50.00 Hindustan Times, New Delhi ... 75.00 All India Radio ... 480.00 Total: 5,605.00 In that return he submitted that these rece .....

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by, that the writing was not a source of his income, that the receipt was of a casual and non-recurring nature and was exempt under section 4(3)(vii). The income-tax department preferred an appeal to the Tribunal. The Tribunal observed that the assessee has been contributing articles on a variety of topics to a variety of magazines and periodicals, that it may be at the inception there was no intention to ask for payment for these articles, but by reason of later developments created by the appr .....

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. That it has not been a gift has been admitted by the assessee and it is also stated that the payment is for three years, at least in the case of Kalki. It is this 'time' element which, to our minds, has made this receipt a taxable income. It was also conceded that as the assessee began writing even in 1952, it seems to us difficult to hold that the receipt is of a casual nature. We, however, hold that the assessee is not a professional writer." We may mention even at the very outs .....

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It should not be capital gains chargeable under section 12B of the Act. 2. It should not arise from business or the exercise of a profession, vocation or occupation. 3. It should be of a casual and non-recurring nature. 4. It should not be by way of addition to the remuneration of an employee. Unless all these conditions are satisfied the exemption under that provision cannot be invoked. So far as this case is concerned, there can be no difficulty in holding that the receipt did not arise from a .....

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the Kalki or the Hindustan Times or the All India Radio. But, in our view, that by itself cannot enable the assessee to get out of the clutches of taxation invoking the aid of this special exemption provision. It seems to us to be clear that writing of books and contribution of articles to periodicals and magazines really constitute the vocation of the assessee. A vocation is only a way of living or a sphere of activity for which one has special fitness. It is not necessary that such activity sh .....

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y be called a vocation for the purposes of the Act, it has to be shown that it was an organised activity and that it was indulged in with a motive of making profit; that as the appellant's activity in teaching Vedanta was neither organised nor performed with a view to making profit, he could not be said to be carrying on a vocation. It is said that as the word 'vocation' has been used along with the words 'business and profession' and the object of a business and a profession .....

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; A successful and a prosperous lawyer may spend his leisure hours lucratively in writing books on any subject, Philosophy, Economics, Astronomy or Physical Chemistry. Such earnings by him are certainly taxable as income under the Income-tax Act. A judicial officer with musical attainments may delight the public by giving performances in the All India Radio and obtain payment. It can be said with the utmost propriety that music is a vocation of the officer and he obtained the payment in the exer .....

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al and a token of appreciation. Remuneration is something that an employer has arranged or contemplated or at least knows about even though the payment may be contingent on various factors such as availability of funds, generosity of others and other precarious circumstances. Remuneration for services is generally effected by systematic and recurring payments though this is certainly not always so. Remuneration has further the element of reward of payment for some specific services rendered : se .....

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953, 1954 and 1955 were deferred and a lump sum payment was made in the year of account. It is also implicit in the very nature of the return made by the assessee that there was an expectancy of payment for the contribution of the articles made by him to that journal. Even assuming that the assessee did not expect any payment at the time when he actually contributed the articles to the magazine, and assuming further that a lump sum payment of ₹ 5,000 was voluntarily made by the proprietor .....

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able to income tax although it is voluntary on the part of the persons who made it, and that the test is whether, from the standpoint of the person who receives it, it accrues to him in virtue of his office ; if it does, it does not matter whether it was voluntary or whether it was compulsory on the part of the persons who paid it. That seems to me to be the test; and if we once get to this-that the money has come to, or accrued to, a person by virtue of his office-it seems to me that the liabil .....

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ble as income despite the voluntary nature of the payment as they enure to the person receiving them only in their capacity of holding the particular employment. In a recent decision of the Court of Appeal in England in Wright v. Boyce [1958] 38 Tax Cas. 160; [1959] 36 ITR 504, the facts were as follows : A huntsman received presents of cash at Christmas time, mostly from persons with whom he was in contact in that capacity. Many of these persons were his personal friends. When he was engaged by .....

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