TMI Blog1982 (11) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... s some time in 1973. His particular line of social work lay in running orphanages, Sunday schools and Bible classes. What sustained this individual in the range of his work from the very beginning till this day were the remittances of money which came in steadily from foreign missionaries, chiefly from two organizations, one called " Inter Mission " (apparently a shortened form of International Mission) with its headquarters in Hanover, Germany, and an American Foundation called " Native Missionary ". Enormous sums of money, enormous from the point of view of this one-time postal employee, passed through his hands. All of them came from abroad either in dollars or in other currencies. The assessee spent the money in maintaining an orphanage, a Bible class, a Sunday school, and so on. He paid salaries to teachers, wages to persons who were described as helpers, and purchased equipment for the school and the orphanage. He spent money on buying land and constructing sheds and buildings for the poor. He spent some money in maintaining a common mess for the pupils in the Sunday school. He also invested in the purchase of a car and what not. All for the cause. By the time we speak of, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept his version. The assessee was employed as a Selection Grade Clerk in the Office of the Director, Audit and Accounts, P T, Madras-8, and it was stated that he was on leave on loss of pay since 25-8-69. The assessee has 9 children and is living with his wife and children in the premises No. 5, Subbiah Naidu Street, Vepery, taken on rent for Bible school. He, with the members of his family, is messing in the common mess meant for the Bible school and the total rent for the Bible school is one thousand rupees per mensem for an area of 2,000 square feet and the portion occupied by the assessee may be 400 square feet. From the style of living of the assessee, I consider that the benefits enjoyed out of the funds received from foreign missionaries could be estimated at Rs. 10,000 per year and I treat this amount of Rs. 10,000 as the income of the assessee." This estimate of Rs. 10,000 provided the standard basis of assessment for the two years, 1969-70 and 1970-71. There were, however, individual variations in the two assessments. In 1969-70, for example, the ITO added two more amounts. One was a sum of Rs. 5,000 admitted to be the cost of construction of an orphanage building in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee's activities is in order to find out if they produce taxable income for the assessee. Everywhere in the world income-tax law fights shy of rendering a complete definition either of income or of its sources Advisedly, because the categories of income, as well as the categories of sources of income, are never closed. We have the three learned professions, of the law, medicine, and priesthood, which are classic examples of self-employment as a source of income. To this exclusive list was recently added the profession of accountancy by judicial say-so. Apart from the learned professions, there are countless other professions, one of which carries the sobriquet of being holder than the rest, not to speak of crafts, vocations, avocations, occupations, callings and various other means of self-employment, whether organized or unorganized, whether statutorily controlled or otherwise. Sport and pastime account for innumerable self-employment opportunities, from the gladiators of ancient Rome down to those who participate in the big business of Tennis. All these sports-men and sports-women are taxable on their earnings if they take to their games as professionals. Reports of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned judge, however, ruled out the assessment. Going to the races, he said, was a mere habit with that individual. Income-tax was not a tax on a habit, the learned judge added. Graham v. Green [1925] 9 TC 309 (KB). Hobbies and addictions apart, it would seem that any human pursuit which involves the seeking after emoluments or which involves the unrestricted inflow of money into private hands, whether or not devoutly wished for by the individual concerned, tends to make him not only an income-earner, but also an income-tax payer to boot. And if he has family to maintain, and has not altogether renounced it, he may be truly regarded as its breadwinner. Into this class of breadwinners must be assigned self-employed and other-employed social workers. Before all the tax authorities it has always been the boast of the assessee in the present case that he is a social worker, first and last. We cannot quarrel with this description. But, at the same time, we cannot accept the implication that social work is some nondescript activity of a non-materialistic character. It is time we, in this country begin to realize social work for what it is. In the beginning, this kind of work in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of those which his dependants enjoy in the process. If there are accounts, and if the accounts record both the personal allowances to the social worker and the drawings therefrom, the computation of his income is an easily verifiable process. But, in cases where there are no accounts or where the social worker simply appropriates to himself, willy nilly, the material requisites for his well-being and that of his family, it does not mean he has no income at all to report, but only that it becomes laborious process to estimate his income to the nearest rupee. The Tribunal have clearly accepted the position that the assessees social work is not something etherial or spiritual, but must be regarded as a mundane occupation. This is what they say in their order : " The basic question for consideration is whether the foreign remittances formed the income of the assessee. The Revenue's only reason for considering it to be, assessee's income is that the assessee has received the remittances during the course of his occupation of carrying on social work and the work as an evangelist in a systematic and orderly manner. According to it, the money received by the assessee in the course of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so called does not mean that be is a wage-earner under anybody. He is so called for want of a more accurate description. The Tribunal erred in thinking that in order that income may be received it must be money actually put into the hands of the taxpayer by someone demonstrably seen parting with so much cash. For a self-employed activity, such as a business or profession, income does not have to come in, It simply arises or accrues out of that activity. What happened in this case was that income arose to the assessee from the exercise by him of his vocation as a social worker. In the very nature of income of this kind, it can only arise or accrue. The fact that it is not visibly received cannot make it any the less income accruing. Income can accrue visibly as well as invisibly, openly as well as coverly. The assessee has been in possession of the foreign remittances without any control over their disposal, save those which were self-administered. Hence the application of part of such remittances for his own private needs and expenses can reasonably be regarded either as constructive receipt of money as income, or as income accruing to him in the course of the exercise by him of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be regarded as having come by any taxable income from this occupation, even if it were assumed that he had committed breaches of trust or had misappropriated the funds which had been made available to him by the foreign missionaries. We do not see how this idea of misappropriation or breach of trust at all had come in for discussion. We have extracted earlier the relevant passage from the ITO's assessment order. There is not the slightest suggestion in that order that the assessee was guilty either of misappropriation or of breach of trust. All that the officer did was to gain an overall impression of the facts and to regard whatever expenditure to which the assessee had helped himself as being a perfectly legitimate appropriation of the remittances from abroad. It is not suggested that having regard to the size of the remittances and the needs of the charities under the assessee's management, what the assessee took for himself and for members of his family could be characterised as breaches of trust. Indeed, the assessee has been vehemently protesting against any suggestion of that kind. We, therefore, take it that the discussion by the Tribunal in this regard was only for argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upation, the assessee has, if it is the right expression to use, helped himself from the funds of the charity. Having regard to the nature of the occupation and the fact that all other avenues of income earning had been hermetically sealed off for him, by his own choice, the assessee must be regarded as having earned the income to the extent at least of the unquestioned expenditure which he meted out for himself and the members of his family. At the end of the discussion we must hasten to point out that we are not breaking new ground in income-tax law in whatever we have said in the foregoing paragraphs. For nearly 60 years and more we in this country have been living under an express provision in the income-tax code which has not spared from the charge even windfalls, named by the statute as " casual and non-recurring receipts ", if they come into the taxpayer's hands in the exercise of a vocation or occupation. See section 4(3)(vii) of the Indian I.T. Act, 1922, and s 10(3) of the I.T. Act, 1961. P. Krishna Menon's case [1959] 35 ITR 48 (SC) and Rajagopalachariar's case [1963] 50 ITR 196 (Mad), were decided in the way they were only under this specific statutory provision. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 each, there were also additions to that sum in each of the assessment years. The Tribunal in its order had taken the view that the remittances received by the assessee did not constitute his income in any of the two years under the appeal and the additions made by the ITO could not be sustained. This was a general, if not sweeping conclusion. In the light of this determination, the Tribunal expressed the thought that it was not necessary for them to proceed to examine the reasons for which the individual additions were made by the ITO in the assessments. Nevertheless, the Tribunal proceeded to touch, ever so briefly, upon each and every one of the items of additions, namely,Rs. 10,000, Rs. 5,000 and Rs. 7,600 in the assessment year 1969-70, and Rs. 10,000 and Rs. 7,000 in the assessment year 1970-71. We are disposed to think that the Tribunal's review of the details of the assessment orders is extremely sketchy. We feel that the Tribunal might properly have gone into the details of each and every one of the additions in greater depth. Take, for instance, the claim of the assessee's wife to be possessed of independent funds of her own. This claim was by no means proved to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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