http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6  

PETITIONER: P.   KRISHNA MENON

       Vs.

RESPONDENT: THE  COMMISSIONER OF INCOME-TAX,  MYSORE,  TRAVANCORE-COCHIN

DATE OF JUDGMENT: 07/10/1958

BENCH: SARKAR, A.K. BENCH: SARKAR, A.K. AIYYAR, T.L. VENKATARAMA GAJENDRAGADKAR, P.B.

CITATION:  1959 AIR   75            1959 SCR  Supl. (1) 133  CITATOR INFO :  D          1961 SC 946  (15,20,21)  R          1986 SC  98  (14)  R          1986 SC1661  (26)

ACT:        Income-tax-Assessee leaching 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, 1922 (XI Of 1922), S. 10.

HEADNOTE: The  assessee was teaching his disciples Vedanta  philosophy without  any motive or intention of making a profit  out  of such activity.  One of his disciples made gifts of money  to him on several occasions.  It was contended by the  assessee that he was not liable to tax on the amounts received as  he was  not carrying on any vocation and as the  receipts  were not profits or gains. Held that, in teaching Vedanta the assessee was carrying  on a  vocation.   It is not necessary for an activity to  be  a vocation 134 that it should be an organised activity or that it should be practiced with a motive for making profit. Commissioner  of Inland Revenue v. Incorporated  Council  of Law Reporting, (1888) 3 Tax Cas. 105, 113, followed. Held, further, that the payments made by the disciple,  were income  received by the assessee from his vocation.  In  the case  of a voluntary payment, no tax can be levied on it  if it  had been made for reasons purely personal to  the  donee and  unconnected with his office or vocation but it will  be taxable if it was made because of the office or the vocation of the donee.  The question is not what the donor thought he was  doing  but why the donee received it.  In  the  present case  it is plain that it was because of the  teaching  that the gift had been made.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 401 of 1956.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 6  

Appeal  by special leave from the judgment and  order  dated March  8,  1956,  of the  Travancore-Cochin  High  Court  at Ernakulam in I.T.R. No. 24 of 1954. A.   V.  Viswanatha  Sastri,  S. R. Ganapathy  Iyer,  J.  B. Dadachanji and G. Gopalakrishna, for the appellant. K.   N.  Rajagopala Sastri, R. H. Dhebar and D.  Gupta,  for the respondent. 1958.  October 7. The Judgment of the Court was delivered by SARKAR  J.-The appellant who was a Superintendent of  Police in  the  service  of the former  Travancore  State,  retired sometime in 1940.  After retirement he was spending his time in  studying Vedanta philosophy and expounding the  same  to such  persons  as were keen on understanding  it.   He  soon gathered about him a number of disciples, one of whom was J. H.  Levy  of  London, U.K. Levy along with  others  used  to receive instructions in Vedanta from the appellant.  He used to come to Travancore from England at regular intervals  and stay  there  for  a  few months at a  time  and  attend  the discourses given by the appellant and so had the benefit  of his teachings on Vedanta. Levy had an account in Lloyd’s Bank at Bombay.  On  December 13,  1941, Levy transferred the entire balance  standing  to his  credit in this account amounting to Rs.  2,41,103-11-3, to  the credit of an account which he got the  appellant  to open in his name in the 135 same  bank.   Thereafter,  from time to  time  Levy  put  in further  sums  into  the appellant’s  aforesaid  account  in Lloyds  Bank, Bombay.  It appears that the payments so  made up  to  August 19, 1951, amounted to about  Rs.  4,50,000/-. From time to time the appellant got moneys transferred  from his account at the Lloyd’s Bank, Bombay, to his account in a bank at Trivandrum in Travancore. This  appeal arises out of orders for assessment to  income- tax  passed against the appellant for the  assessment  years 1122,  1123  and 1124, all according to the  Malayalam  era. The respective accounting periods according to the Gregorian calendar  were  from August 17, 1945, to  August  16,  1946, August 17, 1946, to August 16, 1947, and August 17, 1947, to August 16, 1948.  It appears that during these periods  Levy bad deposited in the appellant’s account at Lloyd’s Bank  in Bombay  the  following respective sums:  Rs.  13,304/-,  Rs. 29,948/-  and  Rs. 19,983/-.  During the  same  periods  the appellant had obtained transfers of the following respective sums from his Bombay account to his Trivandrum account:  Rs. 81,200/-,  Rs.  47,000/- and Rs. 37,251/-.   The  Income-tax Officer,  Trivandrum, assessed the appellant to tax  on  the latter  amounts as foreign income, i.e., income  arising  in India,  and  brought into Travancore State in  the  relevant periods.   We  are  not  concerned in  this  case  with  the assessment  made  on other income of  the  appellant.   Tile appellant  appealed  from  these assessment  orders  to  the Appellate Assistant Commissioner who consolidated them  into one appeal.  The Appellate Assistant Commissioner  dismissed the  appeal  and  confirmed the  orders  of  the  Income-tax Officer.   The  appellant  then went up  in  appeal  to  the Appellate Tribunal but that appeal also failed. The appellant thereafter obtained an order from the Tribunal referring  the  following  Questions to the  High  Court  of Travancore-Cochin for decision: (i)  Whether the aforesaid receipts from John H.  Levy constitute  income taxable under the  Travancore  Income-tax Act, 1121 ? and 136 (ii) Whether  there are materials for the Tribunal  to  hold

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 6  

that  the  deposits  into the assessee’s  bank.  account  in Bombay  by John H. Levy from 1941 as  aforesaid  represented income that accrued to the assessee outside Travancore State ? " The   High  Court  answered  the  first  question   in   the affirmative.   It  however answered the second  question  in favour  of the appellant, holding that he was carrying on  a vocation or occupation in that State and the income  derived therefrom   should  be  considered  as  having   arisen   in Travancore,  and that therefore the appellant was liable  to be taxed not on the amounts which he brought into Travancore but on the amounts which had been paid to the credit of  his account at Bombay by Levy during the relevant periods.   The appellant has now come up to this Court in appeal by special leave  against  the answer given -by the High Court  to  the first  question.  We are not concerned in this  appeal  with the  answer  given  to the second question as  it  had  been decided  in  favour of the appellant and there has  been  no appeal against it by the revenue authorities. We  do not think that the case presents any difficulty.   It has to be decided on the terms of the Travancore  Income-tax Act, 1121 (Malayalam Era), but as the provisions of that Act are,  for. the present purpose, identical-with those of  the Indian Income-tax Act, 1922 , it would be more convenient to refer to the provisions of the latter. Mr. Sastri, appearing for the appellant, has stated that the case  involves really two points.  First, was the  appellant carrying  on a vocation ? And secondly, if he was,  can  the amounts  with which we are concerned, be said to be  profits or  gains of the vocation ?  We agree with his view  of  the case and proceed to discuss these points. The first question is, whether the appellant was carrying on a vocation.  Under s. 10 of the Income-tax Act, 1922, tax is payable by an assessee in respect of the profit or gains  of any  profession  or vocation carried on by him.   The  facts found are that the appellant was studying Vedanta philosophy himself and 137 imparting  the knowledge acquired by him as a result of  his studies to such as cared to come and imbibe it.  There is no evidence to show, that the appellant had made it a condition that  he would impart such knowledge only to those who  were prepared to pay for it.  We have therefore to proceed on the basis that the appellant was teaching his, disciples Vedanta without  any motive or, intention of making a profit out  of such activity. We  find  no  difficulty  in thinking  that  teaching  is  a vocation  if not a, profession.. It is plainly so and it  is not  necessary to discuss the various meanings of the  word. ’vocation’ for the purpose or to cite authorities to support this view.  Nor do we find any reason why, if teaching is  a vocation,  teaching of Vedanta is not.  It is just  as  much teaching, and therefore, a vocation, as any other  teaching. It  is said that in teaching Vedanta the appellant was  only practicing  religion.  We are unable to see why teaching  of Vedanta  as  a matter of religion is not carrying, on  of  a vocation.   In any case the question does not really  arise, for,  Whether  the  appellant  was,  in  teaching   Vedanta, practicing religion, is of course a finding of fact.  It may be  that Vedanta could be taught as a practice  of  religion but  it could of course also be taught as any  other  philo- sophy or school of thought.  The statement of case in  this. case  does not contain any finding that in teaching  Vedanta the appellant was practicing religion. It  is said that in order that an activity may be  called  a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 6  

vocation  for  the purposes of the Act, it has to  be  shown that  it was an organised activity and that it was  indulged in with a motive of making profit ; that as the  appellant’s activity  in  teaching  Vedanta was  neither  organised  nor performed with a view to making profit, he could not be said to. be carrying on a vocation.  It is said that as the  word ’vocation’ has been used along with the words ’business  and profession’ and the object of a business and a profession is to  make a profit, only such activities can be  included  in the word ’vocation’ the object of which likewise is to  make a profit.  We think that these contentions 18 138 lack  substance.  We do not appreciate the  significance  of saying  that in order to become a vocation an activity  must be  organised.  If by that a continuous, or as was  said,  a systematic activity, is meant, we have to point out that  it is  well-known that a single act may amount to the  carrying on  of  a  business or profession.   It  is  unnecessary  to discuss  this question further as we find no want of  system or  continuity  in the activity of the  appellant.   He  had gathered  a  large number of disciples around  him  and  was instructing  them in Vedanta regularly.  Levy came  all  the way  from  England  at  regular  intervals  to  obtain  such instructions.   All this clearly indicates Organisation  and system. Again,  it is well-established that it is not the motive  of the  person doing an act which decides whether the act  done by  him  is  the carrying on of a  business,  profession  or vocation.   If any business, profession or vocation in  fact produces an income, that is taxable income and none the less because  it was carried on without the motive  of  producing any  income.  This, we believe, is too  well-established  on the  authorities  now to be questioned.  It was  decided  as early  as  1888 in the case of the  Commissioner  of  Inland Revenue v. Incorporated  Council of Law Reporting(1) and followed  ever since,  that " it is not essential to the carrying on  of  a trade  that the people carrying it on should make a  profit, nor  is  it even necessary to the carrying on of  the  trade that the people carrying it on should desire or wish to make a  profit".  If that were not so, a person carrying on  what otherwise would be a business, may say that he did not carry on  a business because it was not his intention to make  any income  out of it.  That would, of course, be  absurd.   The question  is, whether the activity has actually produced  an income and it matters not whether that activity is called by the  name of business, profession, vocation or by any  other name  or  with  what  intention  it  was  carried  on.   The observation  of  Rowlatt, J., in Stedeford v. Beloe  (2)  to which we were referred by Mr. Sastri, that there could be no tax on pension granted to a retired (1) (1888)3 Tax Cas. 105, 113.  (2) (1930) 16 Tax Cas. 505. 139 headmaster  as "there is no background of business in it  ", was  clearly not intended to lay down that without a  profit motive  there could be no business, profession or  vocation. The pension could be taxed only if it had arisen out of  the office  and  the only point decided was that it had  not  so arisen  as  the headmaster held no  office,  having  retired earlier,  at the date the pension had been granted: see  the same case in the House of Lords(1).  We think therefore that the  teaching of Vedanta by the appellant in this  case  can properly be called the carrying on of a vocation by him. Then the other point to be decided is, whether the  payments

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 6  

made by Levy were income received by the appellant from  his vocation  of  teaching  Vedanta.  A  very  large  number  of authorities, both Indian and English, have been pressed upon us  in tile course of the argument.  These cases  illustrate the  application of the well-settled principle that  in  the case  of a voluntary payment, no tax can be levied on it  if it  bad been made for reasons purely personal to  the  donee and unconnected with his office or vocation while it will be taxable if it was made because of the office or vocation  of the donee.  We do not consider it profitable to discuss them in this case.  Also it seems to us that the present case  is too  plain  to require any authority.  The  only  point  is, whether the moneys were received by the appellant by  virtue of his vocation.  Mr. Sastri contended that the facts showed that  the payments were purely personal gifts.  He drew  our attention to the affidavit of Levy where it is stated "  all sums of money paid into his account by me have been gifts to mark  my  esteem  and affection for him  and  for  no  other reason".  But Levy also there said, " I have had the benefit of  his teachings on Vedanta ". It is important to  remember however that the point is not what the donor thought he  was doing  but why the donee received it.  So Collins M.  R.  in Herbert  v.  McQuade referring to Inland Revenue  v.  Strong said at p. 649: " Now that judgment,. whether or not the (1) (1932) A. C. 388.              (2) (1902) 2 K.B. 631. (3)  (1878) 1 Tax CaS. 207. 140 particular  facts justified it, is certainly an  affirmation of  a  principle  of law that a payment  may  be  liable  to income-tax  although  it  is voluntary on the  part  of  the persons who made it, and that the test is whether, from  the standpoint of the person who receives it, it accrues to  him in  virtue  of his office ; if it does, it does  not  matter whether it was voluntary or whether it was compulsory on the part of the persons who paid it.  That seems to me to be the test; and if we once get to this-that the money has come  to or accrued to, a person by virtue of his office-it seems  to me that the liability to income tax is not negatived  merely by reason of the fact that there was no legal obligation  on the  part  of the persons who contributed the money  to  pay it." It  is well established that in cases of this kind the  real question is, as Rowlatt J. put it in Reed v. Seymour (1),  " But  is  it  in the nature of a personal gift  or  is  it  a remuneration?",   an  observation  which  was  quoted   with approval  by Viscount Cave, L. C. when the case went  up  to the House of Lords with the addition " If the latter, it  is subject to the tax ; if the former, it is not ": see Seymour v.  Reed  (2).  We find it impossible to hold in  this  case that  the  payments to the appellant had not  been  made  in consideration  of  the  teaching  imparted  by  him.    Levy admitted  that he had received benefit from the teaching  of the appellant.  It is plain to us that it was because of the teaching that the gift had been made.  It is true that  Levy said that he made the gifts to mark his esteem and affection for  the  appellant.  But such emotions  and  therefore  the gifts,  were clearly the result of the teaching imparted  by the appellant.  Mr. Sastri contends that that may be so, but we  have no right to follow the successive causes and  as  a result thereof link the gift with the teaching.  An argument of  this  kind seems to have been advanced in  Blakiston  v. Cooper (3) and dealt with by Lord Ashbourne in the following words:  "It was suggested that the offerings, were  made  as personal gifts to the Vicar as marks of esteem and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 6  

(1) (1926) 1 K.B. 588.          (2) (1927) A.C. 554. (3)  (1909) A.C. 104. 141 respect.   Such  reasons  no  doubt  played  their  part  in obtaining and increasing the amount of the offerings, but  I cannot doubt that they were given to the vicar as vicar. and that  they formed part of the profits accruing by reason  of his  office."  We  have  no doubt  in  this  case  that  the imparting  of  the  teaching was the causa  causans  of  the making of the gift; it was not merely a causa sine qua  non. The payments were repeated and came with the same regularity as Levy’s visits to the appellant for receiving instructions in  Vedanta.   We  do not feel  impressed  by  Mr.  Sastri’s contention  that the first payment of Rs. 2,41,103-11-3  was too large a sum to be paid as consideration.  In any case we are  not concerned in this case with that payment.   We  are concerned  with payments which are of much  smaller  amounts and  as  to which it has not been -said that they  were  too large to be a consideration for the teaching.  And one  must not  forget, that these are cases of voluntary payments  and the  question  of  the  appraisement of  the  value  of  the teaching  received in terms of money is not  very  material. If  the first payment was too big to have been paid for  the teaching received, it was too big to; have been given purely by way of gift. In  the  view that we take, namely, that the  payments  with which  we  are  concerned, were  income,  arising  from  the vocation of the appellants a teacher of Vedanta, no question of exemption under s. 4(3)(vii) of the Act arises.  In order that  a payment may be, exempted under that section, it  has to  be  shown that it did not arise from the exercise  of  a vocation. In  the  result, we have come to the  conclusion  that  this appeal fails and it is dismissed with costs in this Court.                                    Appeal dismissed. 142