K RAMASWAMI GOUNDER Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question has been referred for the opinion of this court under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), at the instance of the assessee."Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of Rs. 28, 830 was not exempt under section 10(3) of the Income-tax Act, 1961 ?" *For the assessment year 1970-.71 corresponding to the previous year ending on March 31, 1970, the return of the assessee disclosed a total income of Rs. 8, 576 consisting of pension, interest on securities, etc. In Part IV of the return, the assessee, while admitting a net receipt of Rs. 28, 830 towards remuneration as arbitrator, claimed that it was exempt under section 10(3) of the Act, as receipt of a casual and non-recurring nature.

(2.) THE Income-tax Officer brought the receipt of Rs. 28, 830 to tax, as ever since 1964-.65, the assessee had been in receipt of such remuneration for arbitration and that had also been assessed to tax, which had been acquiesced in by the assessee. On appeal to the Appellate Assistant Commissioner, he took the view the assessee was not carrying on any business or profession, that agriculture was his vocation or occupation and, therefore, the appointment of the assessee as arbitrator was casual with no expectation of payment of fee or recurrence thereof and would, therefore, be exempt under section 10(3) of the Act. On further appeal to the Tribunal at the instance of the Revenue, the Tribunal found the following facts.(1) THE assessee had specialised knowledge of industrial law and persuasive ability of a high order to settle disputes amicably and was, therefore, suitable for and sought after as an arbitrator.(2) THE qualifications of the assessee, his skill and experience, his availability as an arbitrator and his remuneration were all well-known (3) That ever since the retirement of the assessee from service, he had accepted arbitration work every year from 1962-.63 onwards and that the arbitration work was given to the assessee through a firm of solicitors (4) That the arbitration work was not done by the assessee gratis even once nor was such work done by the assessee as a diversion or for pleasure (5) That the claim for deductions made by the assessee towards rent for the premises and pay of attendant indicated the permanency of his establishment(6) THE activity of the assessee in taking up such arbitration work would be an "occupation", though subsidiary to his main occupation, which was agriculture.In view of these findings, the Tribunal concluded that the receipt of amounts by the assessee for doing arbitration work would be receipts from the exercise of an "occupation" and would not be exempt under section 10(3) of the Act. Aggrieved by this order of the Tribunal, the assessee has come up before this court as stated earlier.THE learned counsel for the assessee contended that arbitration work of the nature undertaken by the assessee in respect of which he had also been remunerated, stands on a different footing from other kinds of work, in that it is not necessary that parties to a dispute should resort to arbitration or even if they so resort, the assessee need not be approached for doing such work. It was further submitted that the assessee was not pursuing any business or exercising a profession or occupation and that the receipts are of a casual and non-recurring nature and, therefore, exempt under section 10(3) of the Act. Reliance was placed by the learned counsel for the assessee on the decision in B. Malick v. CIT as concluding the question in favour of the assessee. On the other hand, the learned counsel for the Revenue strenuously contended that on the facts found by the Tribunal, arbitration work had been engaging the time and attention of the assessee ever since he retired from service and he had also been remunerated for such services rendered by him. It was further pointed out that the assessee had been found to have been carrying on continuously and systematically arbitration work and that, therefore, it is not correct to consider that work as work not resorted to ordinarily or different from the main occupation, when such work is regularly and systematically accepted and performed.

(3.) THOSE activities cannot be termed as the business of the assessee or even his profession. Under section 2(13) of the Act, the word "business" has been defined to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. Applying this definition to the activities pursued by the assessee, it is obvious that the activities of the assessee cannot be characterised as "business". Under the Act, there is no definition of the word "profession" except that in section 2 (36) of the Act, it has been stated, as noticed earlier, that "profession" includes "vocation". The line of activities pursued by the assessee cannot be equated to those in the exercise of a "profession". Indeed, as a pensioner, who had retired from service, there is no question of the assessee exercising any "profession", particularly having regard to the nature of the activities pursued by him.