V.K.SINGHAL, J. - (1.) THE Tribunal has referred the following question of law arising out of its order dt. 3rd July, 1980, for the asst. year 1978 79 : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that income from brokerage should be assessed as professional income and not business income ?"
(2.) THE brief facts of the case are that the assessee derives its income from brokerage of different commodities. In the assessment order, the said income was considered as that from business whereas the claim of the assessee was that it is a professional income. The claim of the assessee was not accepted. An appeal was preferred against the said order before the CIT(A), Jaipur, wherein it was held that brokerage income was from business and not from profession or vocation. The matter was carried in appeal by the assessee before the Tribunal and it was held that in earning the income from brokerage personal skill is required and at least some manual skill is necessary for earning income and as such it was held that the income from the brokerage should be assessed as professional income. The submission of learned standing counsel for the Department is that income from brokerage is from business and it is not a professional income. According to him, professional income could be of a person like a doctor, an advocate, a chartered accountant and an architect and not of a broker. It has further been submitted that every business requires application of skill for earning the income and, therefore, the test which has been applied by the Tribunal is not in accordance with law. The point to be decided is whether the income from brokerage could be assessed as professional income.
(3.) THE word "business" has been defined under S. 2(13) of the Act to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. The word "profession" has been defined to include vocation, which refers to a way of living and not necessarily course of activity indulged in for earning one's livelihood or making any income. According to Websters' Third International Dictionary, Vol. 3, page 2561 "vocation" has been explained as "the work in which a man is regularly employed usually for pay, line of work". The word "business" is of wider importance than "profession". In IRC vs. Maxse (1919) 12 Tax Cases 41 (CA), it was observed that the profession involves the idea of an occupation requiring either purely intellectual skill, or if any manual skill as in painting and sculpture, or surgery, skill controlled by the intellectual skill of the operator as distinguished from an operation which is substantially the production or sale of commodities. The word "business" is of wider import than the word "profession" and vocation is of still wider import than business. Rowlatt J. in Christopher Barker & Sons vs. IRC (1911) 2 KB 222 has held that every businessman has to use skill and ability in the conduct of his business and, therefore, those qualities are not distinguishing marks of a profession. It was further observed that "all professions are businesses, but all businesses are not professions, and it is only some businesses which are taken out of the operation of the section, namely, those professions, the profits of which are dependent mainly upon personal qualifications and in which no capital expenditure is required or only capital expenditure of a comparatively small amount". Scrutton L.J. in IRC vs. Maxse (supra) observed : "I am very reluctant finally to propound a comprehensive definition. A set of facts not present to the mind of the judicial propounder, and not raised in the case before him, may immediately arise to confound his proposition. But it seems to me, as at present advised, that a 'profession' in the present use of language, involves the idea of an occupation requiring either purely intellectual skill, or if any manual skill, as in painting and sculpture or surgery, skill controlled by the intellectual skill of the operator, as distinguished from an occupation which is substantially the production, or sale, or arrangements for the production or sale of commodities. The line of demarcation may vary from time to time. The word 'profession' used to be confined to the three learned professions the church, medicine and law. It has now, I think, a wider meaning...." From the very proposition discussed above and in accordance with law, the use of skill and ability cannot be the sole criteria to come to the conclusion whether the activity carried on by person is a business or profession. There must be something more than the skill and ability and that may be based on the qualification of the person. The judgment which has been relied upon by the Tribunal was with regard to a firm of auctioneers and not to a firm of brokers. ;