TMI Blog1993 (2) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... arge was lower in the case of a registered firm whose total income included income from a profession carried on by it, in the two assessment years 1973-74 and 1974-75, and the rate of income-tax itself was lower in such cases in the assessment year 1975-76. The Income-tax Officer levied surcharge at the normal rate. There is no discussion in the order of the Income-tax Officer in this regard, may be because this point was not urged before him by the assessee. However, in appeal before the Appellate Assistant Commissioner, the assessee specifically took up this issue and claimed that the activities of the assessee as a sharebroker amounted to a profession, and, therefore, the lower rate of surcharge was applicable to it. The Appellate Assistant Commissioner did not accept the contention of the assessee that the activity of the sharebroker amounted to carrying on a profession. The assessee went in further appeal to the Income-tax Appellate Tribunal (for short, "the Tribunal"). The Tribunal accepted the contention of the assessee and reversed the finding of the Appellate Assistant Commissioner and held that the activity of the firm as sharebroker amounted to a profession and directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same. So far as the Finance Act, 1975, is concerned, though there is no difference in the rate of surcharge in the case of two types of firms, the rates of income-tax have been made different for registered firms whose total income includes income derived from a profession carried on by it and other firms. In the former, the rate range is between 4 per cent. and 22 per cent. whereas in the latter it is between 5 per cent. and 24 per cent. It is in this context that the controversy whether the assessee-registered firm which derived income from its activities as a sharebroker can be said to have derived it from a profession assumes importance. Therefore, what is to be decided is whether the activities of a sharebroker amount to "profession". The expression "profession" has been defined in the Income-tax Act, 1961, in clause (36) of section 2 in contradistinction to "business" which has also been defined in clause (13) of the same section. These two definitions read : "(13) 'business' includes any trade, commerce or manufacture or Any adventure or concern in the nature of trade, commerce or manufacture ; (36) 'Profession' includes vocation." From the above definitions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owledge, and skill ; e.g., law or medical profession. The term originally contemplated only theology, law and medicine, but as applications of science and learning are extended to other departments of affairs, other vocations also receive the name, which implies professed attainments in special knowledge as distinguished from mere skill." In the Corpus Juris Secundum, there is an elaborate discussion about the word "profession". The following extracts from the discussion in volume 72 (at pages 1215-19) are very illuminating and useful for the purpose of the present controversy: "Profession. It has been said that it is difficult, if not impossible, to lay down any strict legal definition of the word 'profession' and that the term may, perhaps, be best understood by mention of some prominent or characteristic elements, rather than by an attempted complete definition. The word is vague, and neither static nor rigid, and is used in many different senses and in one sense it means a public declaration respecting something and in a somewhat different sense it means that of which one professes knowledge. However, the word 'profession' is more commonly employed in the sense of vocatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vely to, the so-called learned professions. The word "profession" now has a broader and more comprehensive meaning than formerly was accorded to it, and its signification now extends far beyond the well-known classical professions of earlier days as the application of science and learning is extended to other department of affairs, other vocations also receive the name. The various other activities which have also now come to be termed professions are enumerated in the Corpus Juris Secundum (volume 72, page 1219). These include, accountants, architects, chemists, editors, engineers, etc. The above enumeration is followed by a list of persons who have been held not to be engaged in the practice of a profession. This list includes beauty culturists, brokers, insurance agents, undertakers and embalmers and various others. From the aforesaid definitions of "broker", "broker-dealer" and "profession" and the discussion on "profession" in the Corpus Juris Secundum, it is clear that a stockbroker cannot be said to be engaged in the practice of a profession. The real job of a stockbroker is to make arrangements for sale of the shares or securities of others. Such activity clearly falls wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above judgment. It appears that, while arriving at the conclusion, the court was influenced by the fact that, one of the partners of the firm in that case Was a qualified engineer, and it was in that context that it held that the activities of the auctioneer amounted to profession. On a careful consideration of the above judgment, we find it difficult to agree with the reasoning and on the conclusion. In our opinion, an auctioneer cannot be held to be engaged in profession. His activities clearly amount to carrying on of "business". The fact that one of its partners happens to be an engineer will make no difference in deciding whether the activity of auctioneer can be held to be "business" or "profession". Reliance was also placed by counsel for the assessee on the Supreme Court decision in CET v. P. V G. Raju [1975] 101 ITR 465, wherein politics was held to be a profession. We have perused the above decision. The reason for the above conclusion is available at page 468 of the Report (income Tax Reports) where Krishna Iyer J., speaking for the court, said : "It is thus clear, without reference to the wealth of case-law relied on by the High Court, that politics has been a prof ..... X X X X Extracts X X X X X X X X Extracts X X X X
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