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PETITIONER: DR. K. GEORGE THOMAS

       Vs.

RESPONDENT: THE C.I.T. KERALA, ERNAKULAM

DATE OF JUDGMENT23/09/1985

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) TULZAPURKAR, V.D.

CITATION:  1986 AIR   98            1985 SCR  Supl. (2) 936  1985 SCC  Supl.  580     1985 SCALE  (2)1135  CITATOR INFO :  F          1986 SC1661  (6)

ACT:      Indian Income  Tax Act,  1922- S.4(3)(vii)  -  Receipts Casual or  non-recurring in  nature  -  Arising  out  of  an avocation Whether  income exigible  to tax  -  Link  between activities of assessee and payments received - Relevancy of.

HEADNOTE:      The assessee-appellant  had associated himself with the India Gospel  Mission while  he was getting his education in the United  States of  America during  1953 to  1957 and was propagating the  ideals of Indian Christian Crusade, U.S.A., an Institution  sponsoring religious education in India. The India Gospel  Mission was  collecting money  for its working abroad through the Indian Christian Crusade. On returning to India in  January 1957  he started  publishing  a  religious magazine  called   "Viswa  Deepam"   and  in   1959  started publishing Malyalam  daily newspaper called "Kerala Dhwani". In the  assessment year 1960-61 he filed a return disclosing a 1088  of Rs.  1,59,894 under  the head  ’business’.  While scrutinising the  accounts,  the  Income  Tax  Office  found amounts totalling  Rs. 2,90,220  credited in  the assessee’s accounts. Since  the names  and other details of persons who had donated  the amounts  were not  available it  had to  be presumed that  the amounts had been given to the assessee by the Indian  Christian Crusade,  U.S.A.  and  therefore,  the Income Tax  Officer rejected  the contention of the assessee that the  amounts received by him were purely personal gifts and testimonials  made voluntarily  and  held  that  the  so called donations  were payments  by way  of remuneration for the work  done  by  the  assessee  in  connection  with  the spreading in  India, of  the ideals  of the Indian Christian Crusade, U.S.A.  and that  these amounts were connected with the business  of the assessee and were liable to be taxed as his business  Income. He,  therefore,  brought  to  tax  Rs. 2,90,220 which  had been received during the assessment year 1960-61.      For  the  assessment  year  1961-62  the  assessee  had received similar  amounts totalling  to Rs. 3,63,750 through the Indian  Christian Crusade, U.S.A. and Income Tax Officer treated this  amount also as business income and brought the

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same to tax. 937      The assessee  filed appeals and the Appellate Assistant Commissioner while  dismissing the  appeals  held  that  the assessee was  a journalist  and  it  was  his  avocation  or vocation to  propagate Christian  ideas and  ideals and that the assessee  during the stay in U.S.A. and after his return was engaged in a movement for the spread of religion and for fighting the forces of atheism.      In further  appeal, the  tribunal held that the amounts did not  represent remuneration  or  payments  for  services rendered, and that the receipts were clearly casual and non- recurring and did not arise in the course of the exercise of any vocation.      The Tribunal  referred the  matter to  the High  Court, which held  that the  receipts of  casual and  non-recurring nature would  not be  included in  the  total  income  of  a person. But  if there was receipts arising from the exercise of vocation,  these would  be included  in the total income, even if  these were  of a  casual or non-recurring nature or voluntary and  the receipts  resulting  from  such  payments would be  outside section  4(3)(vii) of  the Income Tax Act, 1922. Since  there was  link between  the  activity  of  the assessee and  the payments  and the  same were made by those who held  similar views  and  who  were  interested  in  the propagation and the acceptance of those views by the general public, the  receipts, therefore, arose from the exercise of an occupation by the assessee.      Dismissing the Appeals ^      HELD: 1.  The receipts by the assessee arose out of the avocation of  the  assessee  of  propagating  views  against Atheism ant preaching Christian Gospel. [947 H]      2. There  was a  link between  the  activities  of  the assessee and  the payments  received by him and the link was close-enough. [948 A]      Strong &  Company,  of  Romsey  Limited  v.  Woodifield (Surveyor of  Taxes), 1906  A.C. 448 and The Commissioner of Inland Revenue  v. E.C.  Warnes &  Co. Ltd.,  [1919] 12 T.C. 227, referred to.      3. Section  4(3)(vii) of the Indian Income Tax Act 1922 makes  it  clear  that  in  order  to  be  entitled  to  the exemption, the  receipts must  be of income character first. if a  sum of  money is received for the purpose in pursuance of an  avocation or  vocation, it arose out of this vocation or profession. If that is 938 so, then  this was  income under  the Act. Such income could only be  excluded if  it was  specifically excluded  by  any provision of the Act. [943 D-E]      4. The  High Court  rightly held  that in  view of  the facts and  circumstances  of  this  case  as  found  by  the Tribunal, these amounts were received by the assessee in the course of  his avocation  or vocation  and were given to him for the  purpose of the same. These were, therefore, incomes which were  neither of  a casual or non-recurring nature nor were these  capital gains  under s.  12B  of  the  Act.  The amounts were,  therefore, clearly  taxable as  held  by  the Income Tax Officer and by the High Court. [943 E-G]      P. Krishna Menon v. Commissioner of Income-Tax, Mysore, Travancore-Cochin and Coorg. Bangalore. 35 I.T.R. 48, relied upon.      5. The  burden 18  on the revenue to establish that the receipt is  of a revenue character. Once receipt is found to be of  a revenue  character whether it comes under exemption

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or not,  it is  for the assessee to establish. Facts must be found by the Tribunal and the High Court must proceed on the basis of those facts. The High Court cannot afresh go to the facts over-ruling  the facts  found by  the Tribunal  unless there is  a question to that effect challenging the facts as found by  the Tribunal.  In this case the High Court has not interfered with  the basic  facts found  by the Tribunal. It has been  established that  the assessee  was carrying  on a vocation of  preaching of Christian Gospel and helping anti- athesim. He  was running  a newspaper  in aid  of that.  The donations received  from America  were to  help him  for the said  purpose.  They  arose  out  of  his  carrying  on  and contained so  long purpose. The carried on this avocation or vocation.  These  receipts,  therefore,  arose  out  of  his vocation. These  were, therefore,  his  Income,  not  exempt under s.4(3)(vii)  of the  Act and were taxable. [945 H, 946 A-C]      Parimisetti Seetharamma  v. Commissioner of Income Tax, Andhra Pradesh, 57 I.T.R. 532 inapplicable.      Acharya  D.V.  Pande  v.  Commissioner  of  Income-tax, Gujarat, 56  I.T.R. 152, Commissioner of Income-Tax, Gujarat v. Shri  Giurdharram Hariram  Bhagat, 154 I.T.R. 10, Maharaj Shri Govindlalji Ranchhodlaji v. Commissioner of Income-tax, Ahmedabad, 34  I.T.R. 92,  H.H. Maharani  Shri Vijay Kuverba Saheb of  Morvi and  Another v.  Commissioner of  Income-Tax Bombay  City   II,  49   I.T.R.  594   S.A.  Ramkrishnan  v. Commissioner  of   Income-tax,  Madras,   114  I.T.R.   253, Siddhartha Publications (P) Ltd. v. Commissioner of 939 Income-tax, Delhi.  129 I.T.R.  603, Karnani Properties Ltd. v. Commissioner  of Income-tax, West Bengal, 82, I.T.R. 547, Aluminium Corporation  of  India  Ltd.  v.  Commissioner  of Income-tax, West  Bengal,  86  I.T.R.  11,  Anil  Kumar  Roy Chowdhury and  Others v.  Commissioner of  Income-tax,  West Bengal II,  102 I.T.R.  12, Commissioner of Income-tax, West Bengal  III   v.  Kamal   Singh  Rampuria,  75  I.T.R.  157, Commissioner of  Income-tax, West  Bengal  III  v.  Imperial Chemical  Industries   (India)  (P)   Ltd.  74   I.T.R.  17, Commissioner of  Income-tax, Bombay  City II  v. Devi Prasad Khandelwal and  Co. Ltd.  81 I.T.R. 460, and Commissioner of Income-tax v. P.S. Chelladurai, 145 I.T.R. 139, referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal Nos. 295 & 296 (NT) of 1974.      From the  Judgment and  Order dated  19.7.1973  of  the Kerala High Court in I.T.R. Nos. 32 and 33 of 1971.      S.  Poti,   S.  Sukumaran  and  D.N.  Mishra,  for  the Appellant.      G.C. Sharma,  K.C. Dua  and Miss A. Subhashini, for the Respondent.      The Judgment of the Court was delivered by      SABYASACHI MUKHARJI,  J. These  two  appeals  arise  by certificate by  the High  Court in Income-Tax Reference Nos. 32 and  33 of 1971. The High Court of Kerala by its judgment dated 19th  July, 1973  answered the following two questions in the negative and in favour of the revenue.           "(i)  Whether,   on   the   facts   and   in   the           circumstances  of   the  case,  the  Tribunal  was           justified in  law in  holding that the sums of Rs.           2,90,220 and  Rs. 3,63,750  were not assessable as           income of  the assessee  for the  assessment years           1960-61 and 1961-62?

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         (ii)  Whether,   on   the   facts   and   in   the           circumstances  of   the  case,  the  Tribunal  was           justified in law and had material for holding that           the sums  of Rs.  2,90,220 and  Rs.  3,63,750  are           exempt from  taxation under  section 4(3)(vii)  of           the Indian Income-tax Act, 1922 for the assessment           years 1960-61 and 1961-62 respectively?"      The references  relates to assessment years 1960-61 and 1961-62. The  assessee’s accounting  year was  the  calender year. 940 The assessee  publishes a  Malyalam daily  newspaper by name Kerala Dhwani.  Till 1953,  he was a lecturer in History and Political Science  in the  College at  Kottayam. He  had his education in  the United  State of  America, during  1953 to 1957. During  this period  of stay  in the U.S.A. he had the privilege of  associating  himself  with  the  India  Gospel Mission in  the United  States. The India Gospel Mission, it was stated,  was collecting  money for  its  working  abroad through the  Indian Christian Crusade. The assessee was also publishing a  religious magazine  called "Viswa Deepam". The magazine was  started in  January, 1957.  The father  of the assessee Shri  K.G. Thomas  was the  Editor of Viswa Deepam. Shri Thomas  was also  in America  and  he  was  also  doing missionary work  in America  for some  time. In  1958,  Shri Thomas, the  lather of  the assessee  was in  India the  was going to  America off  and  on.  Indian  Christian  Crusade, U.S.A. is  an institution  sponsoring religious education in India and  it was admitted that the assessee was propagating the ideals  of the  Indian Christian Crusade on returning to India after  finishing his education in the States. Later on the assessee  started  publishing  a  paper  called  "Kerala Dhwani". This  paper was started in 1959. While the assessee was in America, he took his Ph.D. degree.      For the  assessment year  1960-61, the assessee filed a return disclosing  a loss  of Rs.  1,59,894 under  the  head ’business’. The  assessee, as  mentioned  hereinbefore,  was publishing Malayalam daily newspaper called ’Kerala Dhwani’. While t  scrutinising the  accounts, the  Income-tax Officer found in  the ledger  folio in  the  name  of  the  assessee amounts totalling Rs. 2,57,138 credited in’ his account. The assessee  was   asked  to   explain  these  credits  and  he represented that  most of  the amounts  were received by the assessee as  donations from  U.S.A. through  an organisation known as  Indian Christian  Crusade, U.S.A.  The  Income-tax Officer found  that the  names and  other details of persons who had  donated the  amounts were  not available.  He  also found that  such amounts  amounted in  all Rs. 2,90,220. The Income-tax  Officer  had  stated  that  in  the  absence  of definite information  regarding the individuals who has made the donations,  it had  to be  presumed that the amounts had been given  by the  Indian Christian  Crusade, U.S.A. to the assessee. The  assessee’s case before the Income-tax Officer was that  the amounts  received by  the assessee were purely personal gifts  and testimonials which were given because of the esteem  and regard  for the  personal qualities  of  the assessee and  that the  payments were  purely voluntary. The Income-tax Officer rejected the contention. He held: 941      (i) The  payment of  donations  started  simultaneously with the  publication of  the daily  newspaper Kerala Dhwani and the  donations were  continued  during  the  period  the publication continued.  (ii) The  donations were regular and continued for the next year also. (iii) There was nothing to show that  the amounts were given on account of the personal

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qualities of  the assessee.  (iv) The  donations were  being made regularly  throughout the year and these were evidently given as  aid to  the running of the newspaper which was the business  carried   on  by  the  assessee.  (v)  The  Indian Christian Crusade,  U.S.A. which  was paying  money  to  the assessee was  an enterprise  in India  established  for  the furtherence of ideals and objectives similar to theirs.      For aforesaid  reasons the Income-tax Officer held that the so called donations were payments by way of remuneration for the  work done  by the  assessee in  connection with the spreading, in  India, of  the ideals of the Indian Christian Crusade,  U.S.A.   The  Income-tax   Officer  came   to  the conclusion that  the  amounts  paid  to  the  assessee  were connected with  the business of the assessee and were liable to be  taxed as  the business  income of  the assessee.  He, therefore, brought  to  tax  Rs.  2,90,220  which  had  been received during the assessment year.      For the next assessment year, the assessee had received similar amounts totalling to Rs. 3,63,750 through the Indian Christian Crusade, U.S.A. For the reasons given in the order of the  previous year,  the Income-tax  Officer treated this amount also  as the  business income for the assessment year 1961-62 and brought the same to tax.      The assessee filed appeals in respect of both the years and the  Appellate Assistant  Commissioner disposed  of  the appeals by  different orders  delivered on the same date. He discussed all  the contentions raised by the assessee in his appellate orders. The main contention raised by the assessee before the  Appellate Assistant  Commissioner was  that  the various amounts  credited in  his bank  account and  in  his personal account  in the  business represented gifts made by personal friends  in  the  U.S.A.,  that  the  amounts  were collected by  the Indian  Christian Crusade and forwarded to India to  the assessee. The Appellate Assistant Commissioner rejecting these  contentions of  the assessee found that the assessee was  a journalist  and  it  was  his  avocation  or vocation to  propagate certain  ideas  and  ideals.  He  was closely associated  with the  missionary work  carried on by the  Indian   Christian  Crusade   in  America  and  he  was propagating the ideals of 942 Indian Christian  Crusade, America  in India  because of his close  relationship   with  that  origination  as  mentioned hereinbefore. The  assessee during  his stay  in U.S.A.  and after his return was engaged in a movement for the spread of religion and  fighting the  forces of  atheism. According to the assessee,  his friends in America and those Who believed in the  cause which  he sponsored were sending him donations for helping  tile movement  and the amounts that were handed over to  or were  collected by the Indian Christian Crusade, U.S.A. were remitted to him.      In further  appeal the  Tribunal held  that the amounts did not  represent remuneration  or  payments  for  services rendered. The  tribunal further  held that the receipts were clearly causal  and non-recurring  and aid  not arise in the course of  the exercise  of any vocation. Then the aforesaid two questions  were referred to the High Court under Section 66 (1) of the Indian Income-tax Act, 1922.      The High  Court held  that the  receipts of  casual and non-recurring nature  would not  be included  in  the  total income of  a person. But if there were receipts arising from the exercise  of a  vocation, these would be included in the total income,  even if these were of casual or non-recurring nature or  voluntary and  the receipts  resulting from  such payments would  be outside  Section 4(3)(vii) of the Income-

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tax Act, 1922 (hereinafter referred to as the (’Act’).      Relying on the findings of the Tribunal, the High Court held that  the assessee  was very  actively, fully  occupied with the  activities connected with achieving the objects of straightening faith  in God and fighting against atheism and was occupied  with this affair. The payer which he published for this  purpose was  a daily  coming  out  with  views  in support of  this mission.  Teaching and propagating religion could be an occupation. It was not necessary that its object should be  to earn  a livelihood. Anything in which a person was  engaged   systematically  could  be  an  occupation  or vocation. The  next question would be whether receipts could be said to arise from such occupation or vocation. There was link between  the activity of the assessee and the payments, and that  the payments  were made  by those who held similar views as  those of  the assessee  and  who  were  very  much interested in  the propagation  and the  acceptance of those views by  the general public. The payments were made for the purpose of  helping the  assessee to run the paper which was the mouth-piece or medium through which the ideas were to be spread. The 943 connection between  the activity  of the  assessee  and  the donations was thus intimate. lt arose out of the vocation or the occupation  carried on  by the  assessee. Therefore, the receipts arose  from the  exercise of  an occupation  by the assessee.  The  high  Court  also  considered  whether  such payments were excluded by Section 4(3)(vii) of the Act.      Section 4  of the  Act made  the total  income  of  the previous year  of any  person assessable  to  tax  and  sub- section (3)  specified certain  incomes which  should not be included in  the total  income of  the  person.  Sub-section (vii) of Section 4(3) was in the following terms:           "(vii)  any   receipts  not  being  capital  gains           chargeable according  to the provisions of section           12B and  not being  receipts arising from business           or the  exercise  of  a  profession,  vocation  or           occupation,  which   are  of  a  casual  and  non-           recurring nature  or are not by way of addition to           the remuneration of an employee.      As the  section made  it clear, in order to be entitled to exemption,  the receipts  must  be  of  income  character first. In  the instant case, there is no doubt that if a sum of money  is received  for the  purpose in  pursuance of  an avocation or  vocation, it  arose out  of this  vocation  or profession. If  this is  so, then  this was income under the Act.  Such   income  could   only  be  excluded  if  it  was specifically excluded  by any provision of the Act. The High Court held,  and in our opinion rightly, that in view of the facts and  circumstances  of  this  case  as  found  by  the Tribunal, these  amounts were  not  excluded  under  Section 4(3)(vii) of  the Act.  The position was thus, these amounts were received by the assessee in the course of his avocation or vocation  and were  given to  him for  the purpose of the same. These  were therefore incomes which were not also of a casual or  non-recurring nature nor were these capital gains under Section  12B of  the Act.  If that  was the  position, then, in  our opinion,  the amounts  were clearly taxable as held by the Income-tax Officer and by the High Court.      Several aspects  of the  question were placed before us on a  large canvass namely that the High Court had gone into facts of the first time over-ruling the findings of the fact of the  Tribunal without  there being  a  question  to  that effect and  also there was no finding that the receipts were of  income  character.  In  support  of  these  contentions,

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several decisions  of this  Court were  referred before  us, Inter alia, Parimisetti Seetharamma v. 944 Commissioner of  Income-Tax, Andhra Pradesh., 57 I.T.R. 532. Reliance was  placed on  the observations appearing at pages 536, 537  and 538  of the said report. It was urged that the burden of  proof was wrongly placed by the High Court and on the facts,  that the two circumstances relied on by the High Court did  not establish that certain money was given to the assessee as  remuneration for  services and as such it could not be held that the person concerned was assessable to tax. It was  urged that  the High Court wrongly placed the burden of proof upon the assessee.      But on  the facts and in the circumstance of this case, the conclusion  recorded by  the High  Court in  the instant case was  borne out on the facts on record. The observations of this Court referred to above cannot be of much assistance to the assessee.      The case  which is  most apposite  to the  facts of the instant case  is a  decision of this Court in the case of P. Krishna  Menon   v.  Commissioner   of  Income-Tax,  Mysore, Travancore-Cochin and Coorg. Bangalore., 35 I.T.R. 48. There after retirement  from  Government  service,  the  appellant therein was  spending his  time  in  studying  and  teaching Vedanta philosophy. L, who was one of his disciples, used to come from  London at  regular intervals  to Trivendrum where the appellant  resided, and stay there for a few months at a time and attend his discourses, and so received instructions in  Vedanta  and  had  the  benefits  of  his  teachings.  L transferred his  entire balance  standing to  this credit in his on  account at  Bombay, amounting  to more  that  Rs.  2 lakhs, to  the  account  of  the  appellant  opened  in  the letter’s name  in the  same bank at Bombay. Thereafter, from time to  time, L  put in  further sums  into the appellant’s account in  Bombay. The  question was  whether the  receipts from L.  constituted the appellants income taxable under the Travancore Income-Tax  Act, 1121  (Malayalam Era)  which was identical with  the Indian Income-Tax Act, 1922. It was held that teaching  was a  vocation, if  not  a  profession,  and teaching Vedanta  was just  as much  teaching as  any  other teaching and  therefore a  vocation; that  in order  that an activity might  be called a vocation it was not necessary to show that  it was  an organised  activity and  that  it  was indulged with  a  motive  of  making  profit;  it  was  well established that  it was not the motive of a person doing an act which  decided whether  the act  done  by  him  was  the carrying on  of a  business, profession  or vocation; and if any business,  profession or  vocation in  fact produced  an income, that was taxable income and none the less so because it was carried on without the motive of producing an income; that teaching  of Vendetta by the appellant in that case was the 945 carrying on  of a  vocation by him and that the imparting of the teaching  was the  causa causans  of the  making of  the gifts by  L, and it was impossible to hold that the payments to the  appellant had  not been made in consideration of the teaching imparted  by him, and that, therefore, the payments were income arising from the vocation of the appellants that the payments  made by L were income arising from a vocation. These were  not casual  or  non-recurring  receipts  and  no question of  exemption under  Section 4(3)(vii)  of the  Act arose. It  was further observed that in order that a payment might be  exempted under  Section 4(3)(vii)  as a casual and non-recurring receipt,  it had  to be  shown that it did not

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arise from the exercise of a vocation.      In  the  instant  case  before  us,  identical  is  the position. The  assessee carried  on a  vocation of preaching against atheism.  In the course of such vocation and for the purpose of  the same  he received the amounts in question as donation for the furtherance of the objects of his vocation. The receipts  arose to  the assessee  for the carrying on of the vocation  by the assessee, and these were not casual and non-recurring. These were taxable. These facts were found by the Income-tax Officer. These facts not in so many terms but essentially found  by the  Appellate Assistant  Commissioner and were  reiterated by  the Tribunal  and  the  High  Court accepted these  findings of  facts and answered the question accordingly.      Reliance was  also  placed  on  the  decisions  of  the Gujarat High  Court in the case of the Acharya D.V. Pande v. Commissioner of  Income-tax, Gujarat.,  56 I.T.R.  152., and Commissioner  of  Income-tax,  Gujarat  v.  Shri  Girdharram Hariram Bhagat, 154 I.T.R. 10., decisions of the Bombay High Court in  the Case of Maharaj Shri Govindlalji Ranchhodlalji v. Commissioner of Income-tax, Ahmedabad, 34 I.T.R. 92., and H.H. Maharani Shri Vijaykuverba Shed of Morvi and Another v. Commissioner of  Income-tax, Bombay City II, 49 I.T.R. 594., decision of  the Madras  High Court  in  the  case  of  S.A. Ramakrishnan v.  Commissioner  of  Income-tax,  Madras,  114 I.T.R. 253.,  and decision  of the  Delhi high  Court in the case of  Siddhartha Publications (P) Ltd. v. Commissioner of Income-tax, Delhi,  129 I.T.R.  603., dealing  with  certain facts and  circumstances  where  income  could  be  said  be taxable.      From all  these decisions, two facts emerge. The burden is on  the revenue  to establish  that the  receipt is  of a revenue character.  Once receipt is found to be of a revenue character 946 whether it  comes under  exemption or  not, it  is  for  the assessee to  establish. Facts  must be found by the Tribunal and the  High Court  must proceed  on the basis of the facts found by  the Tribunal.  The High  Court cannot afresh go to the facts over-ruling the facts found by the Tribunal unless there is  a question  to that  effect challenging  the facts found by  the Tribunal.  These propositions are well-settled and in  this case  in the  decision of the High Court, these principles, in  our opinion,  have not been breached. It has been  established  that  the  assessee  was  carrying  on  a vocation, the  vocation preaching  of Christian  Gospel  and helping anti-atheism  was the  vocation of  his life. He was running a  newspaper in  aid of that. The donations received from America  were to  help him  for the  said purpose. They arose out  of his  carrying on  and continued  so long as he carried  on  this  avocation  or  vocation.  These  receipts therefore arose  out of  his vocation.  These were therefore his income. In the facts these were not exempt under Section 4(3)(vii) of the Act. In the premises these were taxable.      Numerous decisions  were referred to us on the question as to  how far the High Court could interfere with the facts found by  the Tribunal. Reliance was placed on the decisions of this  Court  in  the  case  Karnani  Properties  Ltd.  v. Commissioner of  Income-tax, West  Bengal, 82,  I.T.R. 547., Aluminium Corporation  of  India  Ltd.  v.  Commissioner  of Income-tax, West  Bengal, 86  I.T.R.  11.,  Anil  Kumar  Roy Chowdhury and  Others v.  Commissioner of  Income-tax,  West Bengal II,  102 I.T.R. 12., Commissioner of Income-tax, West Bengal  III   v.  Kamal  Singh  Rampuria,  75  I.T.R.  157., Commissioner of  Income-tax, West  Bengal  III  v.  Imperial

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Chemical Industries (India) (P) Ltd., 74 I.T.R. 17., and the decision  of   the  Bombay   High  Court   in  the  case  of Commissioner of  Income-tax, Bombay  City II  v.  Deviprasad Khandelwal and  Co. Ltd.,  81, I.T.R.  460.,  and  also  the decision  of   the  Madras   High  Court   in  the  case  of Commissioner of  Income-tax v. P.S. Chelladurai., 145 I.T.R. 139.      We have  set out  the  findings  of  the  Tribunal  and considered the  findings of  the Tribunal  as  well  as  the judgment  of   the  High  Court.  There  has  not  been  any unwarranted interference  by the  High Court  with the facts found by  the Tribunal.  Basic facts  have been found by the Tribunal.      On the question where income could be said to arise, it may be  relevant to refer to Strong & Co. of Romsey, Limited v. Woodifield  (Surveyor of Taxes), [1906] A.C. 448. There a brewery 947 company owned  an inn which was carried on by the manager as part of  their business.  A customer sleeping in the inn was injured by  the fall of a chimney, and recovered damages and costs against the company for the injury, which was owing to the negligence  of the  company’s servants. The question was whether the  amounts paid  as damages  could be claimed as a deduction from  the business of s carrying on the activities of the  inn-keeper. The Lord Chancellor observed at page 452 of the report as follows:           "I think  only such  losses can be deducted as are           connected with  in the  sense that they are really           incidental to  the trade  itself. They  cannot  be           deducted if  they are  mainly incidental  to  some           other vocation  or fall  on  the  trader  in  some           character other than that of trader. The nature of           the  trade   is  to  be  considered.  To  give  an           illustration,  losses   sustained  by   a  railway           company in  compensating passengers  for accidents           in travelling  might be  deducted.  On  the  other           hand, if  a man  kept a grocer’s shop, for keeping           which a  house is necessary, and one of the window           shutters fell  upon and  injured a  man walking in           the street, the loss arising thereby to the grocer           ought not  be deducted.  Many cases  might be  put           near the  line, and  no degree  of  ingenuity  can           frame a formula so precise and comprehensive as to           solve at sight all the cases that may arise.      In the  case of  The Commissioner  of Inland Revenue v. E.C. Warnes  & Co. Ltd., [1919] 12 T.C. 227., at page 231 of the Report, Rowlatt J. observed:           "I may shelter myself behind the authority of Lord           Loreburn, who,  in his  judgment in  the House  of           Lords in  Strong & Co. v. Woodifield, said that it           is impossible  to frame  any formula  which  shall           describe what  is a loss connected with or arising           out of  a trade.  That statement I adopt, and 1 am           not sure  that I gain very much by going through a           number of  analogies; but  it seems  to me  that a           penal liability of this kind cannot be regarded as           a loss connected with or arising out a trade.      In the  instant case there cannot be any doubt that the receipts by  the assessee  arose out of the avocation of the assessee of  propagating views against atheism and preaching Christian Gospel. 948      In view  of the  facts and  circumstances of  the  case there was  a link between the activities of the assessee and

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the payments  received by him and the link was close-enough. In that  view of  the matter, in our opinion, the High Court was right  in answering both the questions referred to it in the negative  and in  favour of  the  revenue.  The  appeals accordingly fail and are dismissed with costs.      Civil Miscellaneous  Petition No.  10046  of  1976  for condonation of  delay in  filing the  additional  papers  is allowed. A.P.J.                                    Appeals dismissed. 949