TMI Blog1993 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... atter was carried in appeal by the assessee before the Income-tax Appellate Tribunal and it was held that in earning the income from brokerage personal skill is required and at least some manual skill is necessary for earning income and as such it was held that the income from the brokerage should be assessed as professional income. The submission of learned standing counsel for the Department is that income from brokerage is from business and it is not a professional income. According to him, professional income could be of a person like a doctor, an advocate, a chartered accountant and an architect and not of a broker. It has further been submitted that every business requires application of skill for earning the income and, therefore, the test which has been applied by the Income-tax Appellate Tribunal is not in accordance with law. The point to be decided is whether the income from brokerage could be assessed as professional income. The word "business" has been defined under section 2(13) of the Act to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. The word "profession" has been defined to include vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch, medicine and law. It has now, I think, a wider meaning. . . . " From the very proposition discussed above and in accordance with law, the use of skill and ability cannot be the sole criteria to come to the conclusion whether the activity carried on by person is a business or profession. There must be something more than the skill and ability and that may be based on the qualification of the person. The judgment which has been relied upon by the Income-tax Appellate Tribunal was with regard to a firm of auctioneers and not to a firm of brokers. The terms "broker", "profession" and "vocation" have been interpreted and defined in various dictionaries and judgments and a few of them are reproduced below: "Broker: In Black's Law Dictionary (Fifth edition), the word 'broker' has been defined as : An agent employed to make bargains and contracts for a compensation. A dealer in securities issued by others. A middleman or negotiator between parties. A person dealing with another for sale of property. A person whose business it is to bring buyer and seller together. The term extends to almost every branch of business, to realty as well as personalty. One who is engaged for o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the degree of artistic work that he is doing. All these cases which involve questions of degree seem to me to be eminently questions of fact, which the Legislature has thought fit to entrust to the Commissioners, who have, at any rate, from their very varied experience, at least as much knowledge, if not considerably more, of the various modes of carrying on trade than any judge on the Bench.' (Currie v. IRC, Durant v. IRC [1921] 2 KB 332 at 340 (CA)) per Scrutton L. J. It seems to me to be dangerous to try to define the word 'profession'..... There are a good many cases about which almost everybody would agree. Everybody would agree, I should think, that when you find a business, however extensive and, however distinguished in some ways it may be, which consists merely of selling property, whether real or personal, that is not a profession. It is necessary to add the word 'merely', since a sculptor, for instance, may be said to be selling goods. I know there may be a question whether one can regard the contract in that case as a contract for sale, but, if it is not a contract for sale, it may be described as a contract to do work and labour, and there, again, everybody would agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the exercise of intellectual or technical equipment resulting from learning or science. In Words and Phrases, Permanent Edition 34, the word "profession" has been described as under : "Profession" implies professed attainments in special knowledge, as distinguished from mere skill : Teague v. Graves, 27 N. Y. S. 2d., 762, 765, 261 App. Div. 652. The word "profession" is defined as the method or means pursued by persons of technical or scientific training. Board of Superiors of Amherst County v. Boaz, (10 S E 2d., 498, 499, 176 Va. 126). "Profession" within statute exempting practitioners of a profession from unincorporated business tax refers to a status which requires knowledge of an advanced type in a given field of science or learning gained by a prolonged course of specialised instruction and study : Traub v. Goodrich, (143 N. Y. S. 2d., 334, 335, 286 App. Div. 927). A "profession" is a vocation in which a professed knowledge of some department of learning or science is used in its application to the affairs of others or in the practice of an act founded on it ; a vocation founded upon prolonged and specialised intellectual training which enables a particular ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... livelihood and are nearly synonymous and do not bear any relation to the functions, natural or statutory, of political subdivisions. Code 1936 1887(2)(b). The word "trade" signifies barter and exchange, not restricted to commodities, but including transactions involving the medium of money and "occupation" is that activity in which a person, natural or artificial, is engaged with the element of a degree of permanency attached. The word "profession" is defined as the method or means pursued by persons of technical or scientific training and the word "business" implies some constant and connected employment as distinguished from an isolated act or two. Board of Superiors of Amherst County v. Boaz, (10 S. E. 2d., 498, 499, 176 Va. 126). A consultant in matters of corporate finance and reorganisation whose knowledge and skill resulted from business experience and not from any formal education or special instruction, conducted a "business" subject to unincorporated business tax and did not practice a "profession" exempt from tax. Tax Law, 386 et. seq., 386-a. People ex rel. Moffett v. Bates, 93 N. Y. S. 2d., 313, 316, 276 App. Div. 38. Very generally, the term "profession" is emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. It was further held that the appellants as agents of the company were carrying on business and the remuneration which the appellants received from the company in terms of the agency agreement was business profit. From the above judgment of the Supreme Court, the activities carried on under the agency agreement were held to be business. In the case of a broker, the activities are carried on either under a written agreement or even a verbal agreement in respect of different constituents and the activities, therefore, would amount to business. The Tribunal has proceeded only on the basis that some manual/professional skill is required for earning income from brokerage which could not be the only criteria. There should be some special qualification of a person apart from skill and ability, which is required in carrying on any activity which could be considered as profession. This could be by having education in a particular system either in the college or university or it may be even by experience. No such finding has been given by the Tribunal with regard to personal qualification and, therefore, we are of the view that the Income-tax Appellate Tribunal was not justified in com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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