CIT KERALA Vs. P KRISHNA WARRIER

JUDGEMENT

(1.) ONE P. S. Warrier carried on business in Ayurvedic drugs in the name and style of "arya Vaidya Shala". He made a will appointing trustees of his estate. The trustees were directed to carry on the "arya Vaidya Shala" and to maintain a Hospital and a School conducted by Warrier and to apply 60% of the income for the benefit of the Hospital and the School and the rest for the benefit of two Thavazies. Eligibility to tax of 60% of the income directed to be utilised for the Hospital and the School was finally decided by this Court in Commissioner of Income-tax, Kerala and Coimbatore v. P. Krishna warrier 53 ITR. 176. In these appeals the dispute relates to the special surcharge on income-tax and super-tax on the balance of the income directed to be given to the two Thavazies in the account years relevant to the assessment years 1957-58 to 1961-62.

(2.) AFTER the original assessments were completed, on coming to learn that 15% surcharge on tax should have been levied in respect of the total income of the trust, which in his view it was unearned income, the income-tax Officer issued notices under S. 34 (1) (b) and assessed the trustees to special surcharge under the Finance Act 2 of 1957. The order was confirmed in appeal by the Appellate Assistant Commissioner and the Appellate Tribunal.

(3.) BY S. 2 (6aa) it is enacted insofar as it is relevant for the purpose of these appeals, that: "earned income' means any income of an assessee who is an individual, Hindu undivided family, unregistered firm or other association of persons not beeing a company, a local authority, a registered firm or a firm assessed under clause (b) of sub-section (5) or S. 23 (a) xxx (b) which is chargeable under the head "profits and gains of business, profession or vocation" where the business, profession or vocation is carried on by the assessee or, in the case of a firm, where the assessee is a partner actively engaged in the conduct of the business, profession or vocation; or (c) x x x the income of another person, is included in the assessee's income under the provisions of this Act, but does not include any x and includes any such income which, though it is such income which is exempt from tax under sub-section (2) of S. 14 or under a notification issued under S. 60;"