V. RATNAM J.


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. 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. There was nothing casual or non-recurring about the work undertaken by the assessee or the remuneration paid therefor, according to the learned counsel for the Revenue, who contended that the Tribunal was therefore justified on the facts in concluding that the assessee was exercising an occupation and, therefore, the exemption under section 10(3) of the Act would not be available to the assessee. The decision in B. Malick v. CIT relied on by the learned counsel, for the assessee was distinguished on the ground that it was peculiar on its facts and an unusual one relating to the case of a sitting judge of the High Court who was requested to act as an umpire and that such considerations do not apply to the facts found in this caseWe may briefly notice the provisions of section 1 of the Act for purposes of this case. That provides that in computing the total income of a previous year, any income falling within any of the clauses set out therein shall not be included. Clause (3) refers to receipts which are of a casual and non-recurring nature as a category of income to be excluded, unless they are (i) capital gains ; (ii) receipts arising from business or the exercise of a profession or occupation ; or (iii) receipts by way of addition to the remuneration of an employee. Under section 2(36) of the Act, "profession" includes "vocation". It is thus seen that receipts referable to the normal activities of a person as distinct from a chance pursuit have been included and there is an exclusion of those receipts from the benefit of exemption, if such receipts arise from business or the exercise of a profession or vocation or occupation. Therefore, the principal question is whether these amounts received by the assessee are of casual and non-recurring nature and do not arise from business, or the exercise of a profession including a vocation or an occupation, before it could be excluded from the total income under section 10(3) of the Act. To state it differently, if the receipt arises from a business or the exercise of a profession or occupation or vocation, it is subject to tax, though it is of a casual and non-recurring nature.


We now proceed to a consideration of the activities of the assessee in this reference. The post-retirement activities of the assessee consist of looking after agricultural operations in his village and also in bringing about industrial peace by acting as an arbitrator in the resolution of industrial disputes. 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. The assessee cannot be considered to be a member of an organised profession with an enforceable standard of conduct and practising it. Therefore, if at all, the activities of the assessee can fall within the expression "vocation" or "occupation". It is in this connection that it is worthwhile recalling the observations of Braund J. in Lala Indra Sen,to the following effect.



"I should, for myself, be very unwilling to try to lay down any general definition of what a 'business', 'profession', 'vocation' or 'occupation' is, because it is a matter which, to my mind, must necessarily depend in every case upon the circumstances of the assessee, the particular things he does and the degree to which, and the object with which, he does them ...... The truth I think is in this, as in so many other cases, that no exhaustive test can be applied but that all the surrounding circumstances must be considered and commonsense applied. If there is one test which is, as I think, more valuable than another, it is to try to see what is the man's own dominant object-whether it was to conduct an enterprise of a commercial character or whether it was primarily to entertain himself. If the latter was his real objective, I do not think that the circumstance that his hobby might possibly yield him a reward is conclusive of this question whether what he is doing constitutes a 'business', 'profession', 'vocation', or 'occupation' within the meaning of this Act." *


We have already referred to the line of activities pursued by the assessee not being either "business or professional" activities. Whether they would constitute a "vocation or occupation" of the assessee is what remains to be considered. A "vocation", as normally understood, is a calling in which a person passes his life. It may even be stated to be a way of living or a sphere of activity for which one has a special fitness, though it is not necessary that the activity should be indulged in for purposes of livelihood. It is not the case of the assessee that arbitration work has been his calling or he has been passing his life in such work and, therefore, the line of activity pursued by the assessee in accepting and carrying out arbitration work may not be appropriately termed as "vocation". The only other thing that remains for consideration is whether such activities would amount to the exercise of an "occupation" as stated in section 10(3) of the Act. Understood in the ordinary sense, "occupation" is something which occupies or engages one's time or attention. That has reference also to the state of being employed or engaged. In consonance with the equipment, experience and ability of the assessee in industrial adjudications, the assessee has been, by exercising those qualities, devoting his time and attention to the adjudication of industrial disputes. That immediately following his retirement from service and for several years without a break, the assessee has been pursuing this line of activity has been found by the Tribunal and since 1962-63, the assessee has been engaging himself in such work. The assessee, though retired from service, had thus not fully rid himself of the aptitude for industrial adjudications and a preference to do work in that field. The assessee had not taken up such arbitration work on a single or solitary occasion. Continuity and the regularity in the line of endeavour pursued by the assessee had also been established. Having regard to the continuity and regularity in the pursuit of such activities by the assessee since 1962-63, this would be a case where the assessee's time and attention had been occupied by such work. The equipment, experience and the persuasive ability of the assessee have been found by the Tribunal to have been availed of by securing the services of the assessee to do arbitration work in restoring industrial peace. That the assessee has been thought of as a suitable and even a desirable arbitrator, is clearly made out by the number of arbitrations participated in by him since 1963-64 onwards. Indeed, it appears to us that if the need for an arbitrator for settling industrial disputes should arise in the area where the assessee is living, the obvious choice would be the assessee. Industrial adjudication through experienced arbitrators has come to stay and there is nothing casual or non-recurring about either industrial disputes or their adjudication by arbitration. It can even be stated that the possibility of the assessee being appointed as an arbitrator to resolve such industrial disputes could be expected or anticipated. However, the fact remains that in none of the arbitrations, the work was done by the assessee gratis or for pleasure or as a matter of diversion from routine. The amounts received by the assessee retained the attributes of remuneration and totally lacked the features of a personal gift. The arbitration work in respect of which the assessee's services were sought had all been channelised or routed through a firm of solicitors. This could be only on the basis of the suitability and the availability of the assessee for such work having been widely known pursuant to the continuity and regularity in that line of endeavour pursued by the assessee. The maintenance of an establishment in respect of which a deduction for rent and pay of an attendant was claimed by the assessee would also indicate that as a requisite for devoting his attention and time to the arbitration work, the assessee had thought of a permanent establishment. Further, in the prior years, such receipts by the assessee had been subjected to tax and the assessee did not demur. Considering these facts cumulatively, we are of the opinion that the line of activity of the assessee was in the nature of an occupation. No doubt, the assessee claimed that agriculture is his principal and ancestral occupation. That may be so. But it is not uncommon or unusual for the same person to pursue more than one occupation, as ultimately, it would merely be a question of such a person being able to devote his time and attention to the several activities in which he is engaged. Thus, on the facts, the activities pursued by the assessee would be in the nature of an occupation and the receipts therefrom would not, therefore, qualify for exemption under section 10(3) of the ActIt only remains to refer to the three direct decisions on this question. In CIT v. M Ahmad Badsha Saheb a merchant, who was a dealer in hides and skins, was chosen as one of five arbitrators to resolve a dispute amongst the heirs of a Nawab regarding the division of properties. good amount of work was turned out by the arbitrators in that connection and a sum of Rs. 87, 000 was ordered by the court as remuneration and the share of the assessee came to Rs. 17, 400. The question of assessability to income-tax of this amount arose and the Income-tax Officer held that it was liable to incometax. But, on appeal to the Tribunal, it was reversed on the ground that the receipt was of a casual and non-recurring nature. On further reference, Sir Lionel Leach C. J. observed that the receipt was not one arising from the exercise of a profession, vocation or occupation, as the assessee was a merchant dealing in hides and skins and not a professional arbitrator and that it was very unlikely that he would be called for purposes of arbitration. Further, it was noticed there was no stipulation regarding remuneration and the receipt of the remuneration ordered by the court was really of a casual and non-recurring nature. It was emphasised that there can be no rule laid down with regard to what was of a casual and non-recurring nature, but that each case must be decided on its particular facts. In the case referred to earlier, the assessee was a merchant and he had a solitary plunge in the arbitration pool without any stipulation for remuneration. Nobody including himself expected a second or further plunge. But, in this case, the assessee knows what he has been doing and has been solely soaked in arbitration so much so that he can be said to be almost dripping wet in the arbitral process. The case of Ahmad Badsha Saheb can thus have no application at all. The next in point is CIT v. V P. Rao. That was a case of a retired judge of the Madras High Court, like the assessee, who had accepted to serve as an arbitrator for enquiring and reporting about a dispute which had arisen between two districts, now in Andhra Pradesh. The Government agreed to pay him a lump sum of Rs. 3, 000 and travelling allowance as well. The assessee claimed that the sum of Rs. 3, 000 received by him was exempt from assessment under section 4(3)(vii) of the Indian Income-tax Act, 1922. The contention of the assessee was that he having retired had no whole-time profession, vocation or occupation and that the receipt was of a non-recurring nature. This court held that acting as an arbitrator was the assessee's occupation, that he had agreed to act as such on account of the promise made by the Government to pay him a lump sum of Rs. 3, 000 and that receipt arose from the exercise of the occupation as an arbitrator and, therefore, the claim for exemption under section 4(3)(Vii) of the Indian Income-tax Act, 1922, will not be available. We are of the opinion that, having regard to the facts of this case, the decision in CIT v. V P Rao would squarely apply. We now turn to the decision in B. Malick v. CIT. In that case, the assessee, while he was the Chief Justice of the Allahabad High Court, was requested to act as an umpire in a certain matter. The initial reaction of the assessee was one of unwillingness, but owing to intervention from Government, he agreed. In respect of that, a sum of Rs. 20, 000 was paid to him by a special order, though there was a prohibition against payment of any honoraria to judges for taking up and performing other functions. On the question whether the sum of Rs. 20, 000 was liable to be taxed as income in the hands of the assessee, it was held that the amount received was exempt as being a receipt of a casual and non-recurring nature, not arising from the exercise of a profession, vocation or occupation within the meaning of section 4(3)(vii) of the Indian Income-tax Act, 1922. On the facts of that case, the conclusion was correct and unexceptionable, as a sitting judge of any High Court cannot accept any arbitration. Nor can such a judge be stated

to exercise any profession or vocation or occupation within the meaning of section 4(3)(vii) of the Indian Income-tax Act, 1922. There was an embargo on a sitting judge from acting in any arbitration matter and the payment of any honoraria was thus ruled out. It was the intervention of the Home Ministry that was responsible for a special exemption for the payment of the amount. In the light of these peculiar facts of that case, the receipt of Rs. 20, 000 by a sitting judge by way of remuneration for having discharged the duties of an umpire, was held to be casual or non-recurring and not referable to the exercise of any business, profession or occupation. The appointment of a sitting judge as an arbitrator or umpire was something totally unanticipated or unforeseen particularly in view of the impediment laid on them in the way of accepting and discharging such responsibilities. It was in that view, the court held that the remuneration received by the assessee under such circumstances was of a casual and non-recurring nature and also not arising from the exercise of any profession, vocation or occupation. That decision cannot, therefore, be pressed into service by the assessee to claim that, on the facts of this case also, the receipts would be exempt under section 10(3) of the Act. We are, therefore, of the opinion that the Tribunal was quite correct in its conclusion that arbitration work was the occupation of the assessee and the receipts arose from the exercise of such occupation within the meaning of section 10(3) of the Act and, therefore, such receipts are taxable, as they are excluded from the purview of section 10(3) of the Act. We do not think it necessary to go into the question whether the receipts could be subjected to tax even if they happen to be casual and non-recurring, for, once the receipts are held to arise from the exercise of "occupation", they will be taxable. We, therefore, answer the question in the affirmative and against the assessee. There will be, however, no order as to costs.