P. KRISHNA MENON vs. THE COMMISSIONER OF INCOME-TAX, MYSORE, TRAVANCORE-COCHIN AND COORG, BANGALORE

CIVIL APPEAL No. 401/1958Supreme Court1958 INSC 8107 October 1958Bench: 3 JudgesAuthor: T.L. VENKATARAMA AIYYAR, P.B. GAJENDRAGADKAR, A.K. SARKAR9 pages
AI SummaryDismissed

What did the Supreme Court hold?

The Supreme Court held that the assessee was indeed carrying on a vocation by teaching Vedanta philosophy. It clarified that an activity does not need to be organized or motivated by profit to be considered a vocation. The Court further held that the payments made by Levy constituted income received by the assessee from his vocation. The crucial test is not what the donor intended, but why the recipient received the payment. In this case, the payments were made because of the teaching imparted by the assessee, even though Levy stated they were gifts of esteem and affection. The Court cited precedents emphasizing that if money accrues to a person by virtue of their office or vocation, it is taxable, irrespective of whether it was voluntary. The Court found it impossible to hold that the payments were not made in consideration of the teaching. The repeated nature of the payments and Levy's admission of benefiting from the teachings supported this conclusion. Consequently, the appeal was dismissed.

What were the facts?

The assessee, a retired Superintendent of Police, spent his time teaching Vedanta philosophy to disciples. One such disciple, J.H. Levy, made several monetary gifts to the assessee between 1941 and 1951, totaling approximately Rs. 4,50,000. The assessee transferred sums from his Bombay bank account, where Levy deposited funds, to his Trivandrum account. For assessment years 1122, 1123, and 1124 (Malayalam Era), corresponding to Gregorian calendar periods August 17, 1945, to August 16, 1948, the Income-tax Officer assessed the assessee on amounts transferred from Bombay to Trivandrum as foreign income. The Appellate Assistant Commissioner and the Appellate Tribunal dismissed the assessee's appeals. The Tribunal referred questions to the High Court, which answered the first question (taxability of receipts from Levy) in the affirmative, but the second question (whether deposits represented income accrued outside Travancore) in favor of the assessee. The assessee appealed to the Supreme Court regarding the first question.

What were the issues?

1. Whether the receipts from John H. Levy constitute income taxable under the Travancore Income-tax Act, 1121 (or, by parity, Section 10 of the Indian Income-tax Act, 1922)? - Assessee's contention: The assessee argued that he was not carrying on a vocation and that the receipts were not profits or gains of a vocation, but rather personal gifts. He relied on Levy's affidavit stating the payments were gifts to mark esteem and affection. - Revenue's contention: The revenue contended that the assessee was carrying on a vocation (teaching Vedanta) and that the payments received from Levy were income derived from this vocation. 2. Whether there are materials for the Tribunal to hold that the deposits into the assessee's bank account in Bombay by John H. Levy from 1941 onwards represented income that accrued to the assessee outside Travancore State? - This issue was decided in favor of the assessee by the High Court and the revenue did not appeal it, so it is not directly before the Supreme Court in this appeal.

Which sections of the Income-tax Act were involved?

Section 10

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(1) S.C.R. SUPREME COURT REPORTS 133 of supply of limestone even a part from his work in the Ga.ngapur quarry, and the agreement dated August 2, 1941, provides for his supplying limestone for the furnaces at Kulti for a. period of 12 years and for loading iron at Monoha.rpore for a. like period. There was therefore at no time any agreement which operat- ed as a bar to the carrying on of business by the res- pondent.

On a consideration of all the facts established, we are of opinion that the receipt of Rs. 2,50,000 by the respondent is a revenue receipt and is chargeable to tax.

In the result, the appeal is allowed, the judgment of the High Court set a.side and the order of the Tl'ibuna.l restored. The respondent will pay the costs of the appellant throughout.

Appeal allowed. P. KRISHNA MENON v. THE COMMISSIONER OF INCOME-TAX, MYSORE, TRA V ANCORE-COCJHIN AND COORG, BANGALORE (VENKATARAMA AIYAR, GAJENDRAGADKAR and A. K. SARKAR, JJ.)

Income-tax-Assessee teaching Vedanta without object of mak· ing profit-If carrying on a vocation-Disciple making gift of money -Whether receipt amounts to income from vocation-Indian Income· tax Act, I922 (XI of r922), s. IO.

The order continues below.

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