1. This is a reference to this court under section 66(1) of the Indian Income-tax Act, 1922 (hereinafter referred to as 'the Act'), at the instance of the assessee. The question referred for our determination relates to assessment years 1955-56, 1956-57, 1957-58, 1958-59 and 1959-60 for which the corresponding previous years ended on March 31 of each year respectively. The assessee, Dilip Kumar Roy, was a disciple of the late Shri Aurobindo. He utilised his talents given to him by the Divine for doing service for the Divine cause. His two main activities were singing bhajans and writing books. Some of his bhajans were recorded and the earned royalty from the same. He also earned royalty from the books. Both these receipts were charged to tax under the head 'other sources'. He travelled widely not only in India but round the word and sometimes gave lectures on his tour. He attracted several persons towards him, who called him their guru.
2. The assessee had a joint account in the name of himself and Smt. Indira Devi with the State Bank of India, Poona, in which the amounts received between the years 1954-55 to 1959-60 were deposited. The total deposits during all these years aggregated to Rs. 1,54,988. A major part of these deposits amounting to Rs. 96,442 was given by two American gentlemen by name Richard Miller and Don Taxsy. These amounts were utilised for construction of the property known as 'India Milay Harikrishna Mandir' at Poona.
3. As assessments for some of the years were completed, there were reopened under section 34 of the Act.
4. The Income-tax Officer took the view that even assuming that the amounts received were voluntary payments from the various persons, from the standpoint of the assessee they were taxable receipts being received by virtue of his procession whether as a philosopher, writer, musician, or a spiritualist and they are his receipts from procession. On an appeal by the assessee before the Appellate Assistant Commissioner, the finding of the Income-tax Officer was reversed. He took the view that the receipts were not receipts arising from business or exercise of profession or vocation. In his opinion, they were testimonials and personal gifts given to the assessee as a token of esteem and regard for his personal qualities. In view of this finding according to the Appellate Assistant Commission, these amounts for the years 1954-55 to 1959-60 were not subject to tax in the assessment of the assessee for the relevant years. On an appeal by the revenue before the Tribunal the original order passed by the Income-tax Officer was restored. The Tribunal took the view that the amounts deposited in the bank account were liable to tax in the hands of the assessee. It found that all the disciples of the assessee intended to give moneys primarily to him and since the amounts were given to him in the first instance the income from the property constructed out of those amounts could be rightly taxed filled in the hands of the assessee.
5. At the instance of the assessee, the following question has been referred for our determination :
'Whether, on the facts and in the circumstances of the case, the amounts deposited in the joint account in the names of the assessee and Smt. Indira Devi with the State Bank of India, Poona, were liable to be assessed in the hands of the assessee as income under the head 'business, profession or vocation ?'
6. In the statement of case, the Tribunal has mentioned that the question referred to is wide enough to include the various contentions urged on behalf of the assessee before it, namely, whether the amounts received by Indira Devi from Richard Miller, Don Taxsy and other parties belonged to the assessee and whether assessments could be made on the basis that the amounts belonged to him; assuming that the amounts belonged to the assessee, whether they constituted income in his hands; whether in any event the said amounts were exempt from tax under section 4(3)(vii) of the Act and whether the Tribunal erred in law or acted without any evidence and contrary to the materials on record, in holding that the assessee carried on a profession or vocation.
7. On behalf of the assessee three contentions are urged before us by Mr. Palkhivala. Firstly, he contended that the activities carried on by the assessee did not constitute a vocation within the meaning of section 10 of the Act. Secondly, he contended that the amounts from time to time paid to him by the particular individuals were not receipts arising out of a profession or vocation, but the same were given as personal gifts to the assessee out of personal esteem and veneration for him and that the same were not income and were not liable to tax and, lastly, he contended that in any event the amounts were not received by the assessee as his personal income, but they were impressed with the character of a trust.
8. In view of the decision of the Supreme Court in P. Krishna Menon v. Commissioner of Income-tax, it is settled law that teaching is a vocation, if not a profession and teaching Vedanta is just as much teaching as any other teaching, and, therefore, a vocation; that, in order that an activity might be called a vocation, it is not necessary to show that it is an organised activity had that it is indulged in with a motive of making profit; it is well established that it is not the motive of a person doing an act which decides whether the act done by him is the carrying on of a business, profession or vocation; and if any business, profession or vocation in fact produced an income, that is taxable income, and in non the less so because it is carried on without the motive of producing an income.
9. Without deciding the question whether the activities carried on by the assessee constituted a vocation within the meaning of section 10, for the purpose of the present case, we proceed on the assumption that the activities carried on by him constituted a vocation as we are of the view that the second contention urged by Mr. Palkhivala must be upheld. Having regard to the provisions of section 10 of the Act it cannot be disputed that it is only the receipts arising out of profits or gains of business, profession or vocation that can be subjected to tax under that section, but if it is a personal gift for personal qualities of the assessee and as a token of personal esteem it cannot be subjected to tax. It is well settled that by sections 3 and 4 of the Act, the Act imposes a general liability to tax upon all income, but the Act does not provide that whatever is received by a personal must be regarded as income liable to tax. In all cases in which a receipt is sought to be taxed as income, the burden lies upon the department to prove that it is within the taxing provision, Where however a receipt is of the nature of income, the burden of proving that it is not taxable, because if falls within an exemption provided by the Act, lies upon the assessee. Where the case of the assessee is that a receipt did not fall within the taxing provision, the source of the receipt is disclosed by the assessee and there is no dispute about the truth of that the receipt is assessable to income-tax on the ground that the disclosure, the income-tax authorities are not entitled to arise an inference that the receipt is assessable to income-tax on the ground that the assessee has failed to lead all the evidence in support of his content that it is not within the taxing provision. See Parimisetti Seetharamamma v. Commissioner of Income-tax. It is further laid down in this case that a conclusion recorded by the Tribunal by wrongly throwing the burden of proof upon the assessee cannot be regarded as binding upon the High Court in a reference under section 66 of the Act.
10. Whenever an amount is paid as a personal gift for the personal qualities of the assessee and as a token of personal esteem and veneration it cannot be subjected to tax as income arising out of business, profession or vocation under section 10 of the Act. Such a principle is quite apparent from the decision of the Supreme Court in Mahesh Anantrai Pattani v. Commissioner of Income-tax. The head-note correctly sets out the facts and lays down the ratio of the decision as under :
'The assessee acted as the Chief Dewan of the native State of Bhavnagar since December, 1937, and continued to hold that office until January, 1948, when responsible Government was introduced by the Maharaja. On January 22, 1948, the Maharaja passed an order granting the assessee a monthly pension of Rs. 2,000, which was the same as the monthly salary he was drawing at that time. On March, 1, 1948, the Bhavnagar State merged in the United State of Saurashtra and the Maharaja ceased to be the ruler of that State. On May 31, 1950, the Maharaja directed Premchand Roychand & Sons, with whom he had an account, to pay by cheque to the assessee Rs. 5 lakhs out of the amounts laying to the credit of his amount. The amount was paid to the assessee on June 12. Six months later when the accountant asked for instructions as to how that amount should be adjusted the Maharaja made the following order on December 27, 1950 : 'In consideration of the assessee, the ex-Dewan of our Bhavnagar State having rendered loyal and meritorious services, Rs. 5 lakhs are given to him as gift. Therefore, it is ordered that the said amount should be debited to our personal expenses account.' The accessibility to income-tax of this amount of Rs. 5 lakhs was raised in the course of the proceedings for the assessment year 1951-52. At the request of the assessee Maharaja wrote the following letter on March 10, 1953 : 'I confirm that in June, 1950, I gave you a sum of Rs. 5 lakhs which was a gift as a token of my affection and regard for you and your family. This amount was paid to you by Premchand Roychand & Sons according to my letter of May 31, 1950, from moneys in my account with them.' The Income-tax authorities as well as the Appellate Tribunal relied on the Maharaja's letter dated December 27, 1950, to which they attached more importance and which they treated as a contemporaneous documents, and disregarding the letter dated March 10, 1953, held that the amount was a taxable receipt in the hands of the assessee under section 7(1) of the Income-tax Act read with Explanation 2 (before amendment in 1955).'
11. The decision of the Tribunal was affirmed by the High Court on a reference. On an appeal to the Supreme Court, the Supreme Court by a majority decision took the view that on facts the tribunal was in error in treating the letter dated December 27, 1950, as a contemporaneous document and its finding arrived at by this erroneous approach was not binding on the court. The sum of Rs. 5 lakhs was paid to the assessee not in token of appreciation for the services rendered as the Dewan of the Bhavnagar State, but as a personal gift for the personal qualities of the assessee and as a token of personal esteem. The amount was, therefore, in the opinion of the Supreme Court not taxable.
12. It will be useful to refer to some of the observations of Viscount Cave in Reed v. Seymour. At page 646 Viscount Cave points out that :
'...... it must now (I think) be taken as settled that they (salaries, fees, wages, perquisites, or profits whatsoever from an office or employment of profit) include all payments made to the holder of an office or employment as such - that is to say, by way of remuneration for his services, even though such payments may be voluntary - but that they do not include a mere gift or present (such as a testimonial) which is made to him on personal grounds and not by way of payment for his services. The question to be answered is, as....'Is it in the end of personal gift or is it remuneration ?' If the latter, it is subject to the tax; if the former, it is not.'
13. The Calcutta High Court in Devid Mitchell v. Commissioner of Income-tax, lays down the test as under :
'The test for determining whether causal and non-recurring receipts of this kind are mere gifts or windfalls which are not income or income from the profession or vocation of the assessee, is first, whether the payment is connected with the exercise of the assessee's profession or vocation and, second, whether, if it is so connected, it is made merely in appreciation of the personal qualities of the assessee displayed in the course of his engagement or is intended to confer a special benefit on him with respect of the services rendered so as to increase his earnings in the exercise of his profession.'
14. The High Court relied upon the following observations of Lord Loreburn L. C. in the well-known case of Cooper v. Blakiston :
'Where a sum of money is given to an incumbent substantially in respect of his services as incumbent, it accrues to him by reason of his office... Had it been a gift of an exceptional kind, such as a testimonial, or a contribution for a specific purpose, as to provide for a holiday, or a subscription peculiarly due to the personal qualities of the particular clergyman, it might not have been a voluntary payment for services, but a mere present.'
15. The Calcutta High Court also referred to the test laid down by Sir Richard Henn-Collins, Master of the Rolls, as he then was, in the case of Herbert v. Mcquade :
'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 personal who paid it.'
16. For determining the contention whether they are receipt arising out of a vocation or moneys paid as personal gift out of personal esteem and veneration, the above principles have to be followed. The Judicial Member of the Tribunal in his order discarded the evidence that was produced before the taxing authorities in the form of affidavits on the ground that they appeared to have been made by persons interested in seeing that the amounts in question are not held liable to tax. Such a conclusion was arrived at by him notwithstanding the fact that neither before the Income-tax Officer nor before the Appellate Assistant Commissioner the veracity of the facts stated in the various affidavits relied upon was challenged. The Account Member of the Tribunal in his separate order does not refer at all to the evidence in the form of affidavits and he was merely come to an automatic conclusion that once it is held that the assessee was pursuing a vocation, any contribution made, whether by persons who were benefits by the talents directly or by persons who appreciated his activities from afar, would be receipts arising from the exercise of a vocation. In his entire order the evidence which was produced in the form of affidavits was totally ignored. The true principles which will permit a court in a reference to interfere with the findings of fact of the Tribunal are now well-settled in view of the decision of the Supreme Court in Mehta Parikh & Co. v. Commissioner of Income-tax. In that case the cash book of the assessee was accepted and the entries therein were not challenged. Neither further accounts nor vouchers were called for. The personal who gave the affidavits were not cross-examined. When such facts exist, the Supreme Court points out that it is not open to the revenue to challenge the correctness of the cash book entries or the statements made in the affidavits. It is further held in this case that the facts proved or admitted may provide evidence to support further conclusion to be deduced from them which conclusion may themselves be conclusions of fact and such inference from facts proved or admitted could be matters of law. The court would be entitled to intervene if it appears that the fact-finding authority has acted without any evidence or upon a view of the facts, which could not reasonably be entertained or the facts found are such that no person acting judicially and properly instructed as to the relevant law would have come to the determination in question.
17. As the Judicial Member of the Tribunal has discarded the facts stated in the affidavits notwithstanding the fact that the veracity of those facts was challenged neither before the Income-tax Officer nor before the Appellate Assistant Commissioner and as the Assistant Member has based his finding without referring to this evidence, it will be useful to refer to the evidence that was produced before the taxing authorities. It is not disputed that the major gifts flowed from two American gentlemen by name Richard Miller and Don Taxsy. In this affidavit declared on September 25, 1959, Richard Miller has stated that in about the end of June, 1954, he, inter alia, found that the assessee had no money to build a temple for the installation of the image of Lord Krishna. He though of himself building a temple for him in a convenient locality in Poona and presenting the temple house thereafter as a gift to his guru, the assessee, who could also stay in a portion of the temple house, along with his disciples. The desire and urge on his part for himself building to temple house for his guru was actuated on account of his guru's spiritual reputation, his valuable contributions to literature, music, religion and various fields of cultural activities. It was from and after the month of November, 1954, that either every week, or every fortnight, or every month from his savings he started sending the amounts. At no time prior to July 26, 1956, he had even net the assessee. This affidavit was filed before the Income-tax Officer and its truthfulness was not challenged by cross-examination of Richard Miller. When the appeal was pending before the Appellate Assistant Commissioner a letter of Richard Miller dated September 28, 1962, was also produced. In this letter also he has stated that he sent all the moneys to Indira Devi to build the temple for the assessee. He hardly knew the assessee except through his books and records. The amounts were sent for the express purpose of building the temple house. At no time in his life he had received any instructions from the assessee. According to him the assessee was not giving any instruction to anyone and he was only singing at different places. Another American gentleman by name Don Taxsy who was living with Richard Miller also contributed several amounts from time to time. In his affidavit declared on September 25, 1959, he has stated that at no time prior to July 26, 1959, he met the assessee at any time. He saw him for the first time when he arrived at Poona on that day. He further states in his affidavit that he was impressed on reading the assessee's books, that the assessee had no money with him to build a temple for his Lord and he thought of sending him mite towards building temple house for the assessee. He joined his friend Richard Miller in sending along with him his weekly savings from out of his weekly earnings to Indira Devi, Poona. The veracity of these statements in these affidavits was not even questioned by the Income-tax Officer at any time. While the matter was in appeal before the Appellate Assistant Commissioner a letter dated September 28, 1962, written by Don Taxsy was filed. In this letter he has also stated that he was charmed by the voice and books of the assessee. At no time he had received any instructions from the assessee as he did not even meet him prior to July 26, 1959. The affidavits disclose facts of which veracity cannot be challenged if regard be had to a letter dated January 1, 1956, written by Richard Miller which is made a part of the statement of case as annexure 'H'. In this letter, at a time before the major contributions were made by these persons, Richard Miller has stated that the assessee agreed to him suggestion that a temple must be built and he was over-joyed to learn that some other devotees were also contributing to the fund. Richard Miller and Don Taxsy amongst them contributed a sum of Rs. 96,642.70. As neither of these persons had received any instructions from the assessee or ever heard him or even seen him, prior to July, 1959, any amounts paid by them to the assessee can never be regarded as a receipt by the assessee in exercise of his vocation. It was purely out of personal regard, esteem and veneration for him that they from their savings contributed from time to time the various amounts. They are purely personal gifts out of personal esteem and veneration and cannot be regarded as receipts received by the assessee in exercise of his vocation.
18. Amongst the affidavits filed before the Income-tax Officer one of the affidavits was of Kanta Manda, a sister of Shrimati Indira Devi. She has clearly stated in his affidavit that she made a gift of various amounts in all aggregating to Rs. 15,600 to her sister for the cost of two rooms to be built in the temple house. It is even difficult to understand in the face of this affidavit how any amount paid by Kanta Manda can be regarded as even a receipt by the assessee himself. The other persons who had paid the amounts have made similar affidavits. The affidavits are made by all the persons who have contributed practically the entire amount which is sought to be assessed in the hands of the assessee during the relevant assessment years. Merely because we have assumed that the assessee was carrying on a vocation there is no presumption in law that any amount received by a person carrying on a vocation is automatically income subject to tax. Every affidavit made in this case far from showing that the amount paid was by way of recompense for the teaching alleged to be received from the assessee, shows that it was a payment made as purely personal gift out of regard, personal esteem and veneration and expressly for the purpose of building a temple at Poona. Ordinarily, the burden lies upon the revenue to show that any amount which it seeks to tax in the hands of an assessee is income. In fact, no evidence whatsoever has been produced on behalf of the revenue to show that these receipts are income and in the face of these affidavits, it is affirmatively established that the amounts which were paid by these persons were mere personal gifts out of personal regard, esteem and veneration for the assessee. Such gifts cannot be taxed as income arising out of business, profession or vocation within the meaning 10 of the Act.
19. Strong reliance was placed by Mr. Hajarnavis upon the decision of the Supreme Court in Krishna Menon's case above referred to. That decision, in our opinion, has no application to the facts of the present case, because the Supreme Court in that case took the view that in taking up teaching Vedanta Philosophy the assessee was carrying on a vocation and that the payments made by the disciples were received by the recipient from his vocation. In that case the Supreme Court has also taken the view that if the voluntary payments had been made for reasons purely personal to the done and unconnected with is office or vocation they would not be taxable, but if they had been made because of the office they could be taxable. However, regard to the facts, of the present case, we have taken the view that the amounts were contributed by Richard Miller and Don Taxsy and other as personal gifts to the assessee out of considerations of esteem and veneration. We also have further pointed out that none of these persons had at any time obtained the benefit of the teachings by the assessee. In view of this finding the ratio of Krishna Menon's case cannot be attracted.
20. In the view that we have taken on the second contention of Mr. Palkhivala it is unnecessary to consider his further contention that in any event the amounts received by the assessee are impressed with the character of a trust.
21. In the result, we answer the question referred to us in the negative. The revenue shall pay the costs of the assessee.
22. Question answered in the negative.