Full Judgment Text
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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.
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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