COMMISSIONER OF EXPENDITURE TAX THE GUJARAT Vs. MANORAMA SARABHAI SMT

JUDGEMENT

(1.) This is a reference under section 25(1) of the Expenditure Tax Act 1957 at the instance of the Commissioner of Expenditure Tax Gujarat. The assessee in this case is Shrimati Manorama Sarabhai. The assessment year with which we are concerned is the assessment year 1959-60 the accounting year being the year which ended on 31 March 1959. The assessee is a B. Sc. in Social Sciences of the London University and a graduate of the Bombay University. She devotes part of her time to running educational institutions for children. She has been associated with the Shreyas School at Ahmedabad for about fourteen years and is one of the persons running the same. The school is run in the same way as other institutions with the help of paid employees but in view of her financial position the assessee renders service to the school in an honorary capacity. At the time when she left India in or about April 1958 she applied to the Reserve Bank of India for allotment of the necessary foreign exchange. In her application she stated that she was thinking of going abroad for one year for seeing some progressive experimental schools in England and Europe that since 1947 she and her sister-in-law had founded a school named Shreyas which had been recognised by the Bombay State as an experimental school and that her idea in going abroad was two-fold. One of her ideas was that she wanted to study educational psychology which she felt would help her in the understanding of children and that she had written to the Tavistock Institute to let her have the benefit of their course in educational psychology and that the Institute had agreed to do so. She also wanted to see the working of schools both in England and Europe whenever time permitted her to do so. She further stated that if given the requisite exchange she would be going with ten years experience in a school and felt that it would help her to imbibe what was best abroad and bring it out to be incorporated in the education imparted in India. She secured admission in the Tavistock Clinic of Mental Hygiene London for the purpose of training in education and clinical psychology She completed the training in June 1959 and was accepted for a further year as an associate student in the adult department of the clinic for the year 1959-60 also. She traveled to places like Switzerland Holland and Scandinavia for the purpose of studying institutions connected with children in those countries. In the aforesaid activities she incurred expenses to the extent of Rs. 13 952 during the year ending on 31st March 1959. She claimed that she was entitled to an exemption in respect of the expenditure incurred as aforesaid under section 5(a) of the Expenditure Tax Act 1957 She succeeded in her contention before the Income Tax Appellate Tribunal. Thereupon at the instance of the Commissioner of Expenditure Tax this reference has been made for the purpose of determining the question following :-

(2.) Section 5(a) of the Expenditure Tax Act 1957 runs as follows :-

(3.) The learned Advocate General who appears on behalf of the Commissioner urged that the words business profession vocation or occupation as used in this section should be understood in the same sense in which the words business profession or vocation have been used under the Indian Income lax Act 1922 He submitted that unless an activity is carried on with the dominant motive of deriving income or profit it would not fall within the words business profession vocation or occupation used in section 5(a) of the Expenditure Tax Act 1957 He further urged that the legislature has in the section also provided that any expenditure incurred by an assessee wholly and exclusively for the purpose of earning income from any other source was expenditure which was excluded for the purpose of the expenditure tax and that the said provision indicated the general intent of the legislature in enacting section 5(a). The words from any other source clearly mean from any source other than business profession vocation or occupation. In his submission it was necessary that the words business profession vocation or occupation should also refer to activities carried on for the purpose of earning income and if any activity was not carried on for the purpose of earning income then having regard to the context in which the words were used in the section such activity would not constitute business profession vocation or occupation. The meaning sought to be given by the learned Advocate General cannot be attributed to those words in the light of the context in which the words have been used. If the legislature intended to confine the exemption to the expenditure incurred for the purpose of earning income the legislature would have used the words for the purpose of earning income from business profession vocation or occupation and not merely the words for the purpose of the business profession vocation or occupation. The words for the purpose of have been used in connection with the words the business profession vocation or occupation and have been repeated in connection with the words earning income from any other source. The legislature has thus provided disjunctively for different categories of expenditure and it is not right that the concept underlying one category should be imported into the other. For the purpose of the present case we will have to consider whether the assessee carried on any vocation or occupation. It is not necessary that the income or profit motive should exist before an activity can be termed vocation or occupation. A vocation or occupation may be carried on without any profit motive. A vocation or occupation may be carried on out of consideration of social service or of conferring some benefit to humanity or to a class of persons. One cannot say that merely because income has not been derived or income has not been desired an activity cannot be regarded as vocation or occupation. The earning of income or the desire to earn income cannot be regarded as the dominant consideration or the requisite element for the purpose of constituting an activity into a vocation or occupation It may be that a vocation or occupation carried on by a person may yield income or may not yield income. The mere fact that no income is intended to be derived or to be received from such activity would not make that activity cease to be vocation or occupation. Even as regards business it has been held that it is not essential to the carrying on of a business that the person carrying it on should make a profit or even that he should desire or want to make a profit. A business may be carried on no profit no loss basis Co-operative societies or mutual insurance companies may carry on business although they may not make and may not want to make any profit. A reference may be made to a decision of the Supreme Court in the case reported in 35 I.T.R. page 48-P. Krishna Menon v. Commissioner of Income Tax Mysore Travancore-Cochin and Coorg Bangalore. It has been held in that case 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 in with a motive of making profit. The word occupation is a word of wider import than the word vocation. A person who is carrying on an occupation need not necessarily be carrying on a vocation but every person carrying on a vocation must be regarded as one carrying on an occupation. If a profit motive is not the pre-requisite of the activity vocation it cannot be regarded as the pre-requisite of the activity which could be termed occupation. On the facts of the present case the activity carried on by the assessee must be regarded as an occupation within the meaning of section 5(a) of the Expenditure Tax Act 1957 If she had for the service rendered by her been receiving remuneration then in accordance with the argument advanced by the learned Advocate General such activity was liable to be regarded as occupation and any expenditure incurred by the assessee wholly and exclusively for the purpose of such occupation would have been exempt from expenditure tax. Merely because the assessee being in affluent circumstances does not receive any remuneration the character of her activity does not change. If her activity could be regarded as an occupation within the meaning of the section if she received remuneration therefore it is not possible not to regard it as occupation merely because she is carrying on the same activity from the motive of doing social service or social good without taking any remuneration therefore.