1. The question that arises for consideration in this writ petition under Article 226 of the Constitution of India is whether the income received by a person appointed as a judge of the High Court, in respect of the fees due to him while carrying on the profession of an advocate is chargeable to tax under Sub-section (4) of Section 176 of the Income-tax Act, 1961 (Act No. 43 of 1961). Sri Valluri Parthasarathy, the petitioner herein, was practising as an advocate of the High Court of Andhra Pradesh till April 4, 1968, when he was appointed a judge of the High Court of Andhra Pradesh. On such appointment on account of the constitutional disability he ceased to practice. He retired as a judge of the High Court of Andhra Pradesh on March, 6, 1972, and in June, 1972, he informed the Bar Council of Andhra Pradesh that, he is resuming practice subject to the provisions of Article 220 of the Constitution. During the assessment year 1969-70, he received a sum of Rs. 11,000 and during 1970-71 a sum of Rs. 3,000 by way of fees for the professional services rendered by him during the period prior to his appointment as a judge of the High Court. The Income-tax Officer assessed these amounts to tax. No appeal was filed before the Assistant Commissioner of Income-tax. The ' petitioner, however, filed a revision petition before the Commissioner of Income-tax under Section 264 of the Act. The Commissioner of Income-tax did not accept the contention of the petitioner that the fees for the professional services rendered by him earlier as an advocate but received while he was a judge of the High Court, when he was not carrying on the profession of an advocate, was not chargeable to tax, and dismissed the revision petition by his order dated October 31, 1972.
2. In this petition, it is contended that on the facts and circumstances of the case Section 176(4) is not attracted. Mr. Dasaratharama Reddy, the learned counsel for the petitioner, contends that the petitioner cannot be said to have discontinued his profession of an advocate; he merely suspended his profession on account of the constitutional disability incurred by him during the period when he was a judge of the High Court. In case of mere suspension of profession, Sub-section (4) of Section 176 is not applicable. He also contends that even if it is deemed to be discontinuance of the profession, Sub-section (4) of Section 176 is not attracted. That provision, according to him, is only attracted where discontinuance of the profession is due to retirement or death, of the person concerned and not discontinuance for other reason. He further argues that even if cessation of profession includes suspension of practice for a short period, it could only cover cases of voluntary cessation and not involuntary cessation of profession due to constitutional provisions. Oa the other hand, it is contended for the revenue that even temporary suspension of business or profession for whatever reason, is covered by Sub-section (4) of Section 176. At the outset it would be useful to notice the law as laid down by the Supreme Court in Nalinikant Ambalal Mody v. S. A. L. Narayan Row, Commissioner of Income-tax : 61ITR428(SC) . That was the case of an assessee who was an advocate, who had adopted the calendar year as the accounting year and had kept his accounts on cash basis. That advocate ceased to carry on his profession from 1st March, 1957, when he was elevated to the Bench of the High Court. In the years 1958 and 1959, during no part of which he carried on any profession, he received certain monies on account of fees outstanding lor professional work done by him. This income was assessed to tax. The court held that these receipts were not chargeable to tax at all. In coming to that conclusion the court observed :
' Whether an income falls under one head or another has to be decided according to the common notions of practical men, for the Act does not provide any guidance in the matter. The question under which head an income comes cannot depend on when it was received. If it was the fruit of professional activity, it has always to be brought under the fourth head irrespective of the time when it was received. There is neither authority nor principle for the proposition that an income arising from a particular head ceases to arise from that head because it is received at a certain time. The time of the receipt of the income has nothing to do with the question under which particular head of income it should be assessed.'
3. The court also rejected the contention that the receipts, had to be included in the total income as stated in Section 4, and since they do not fall under any of the exceptions mentioned in that section, these receipts are liable to tax and that, therefore, they must be considered as income under the residuary head as they could not otherwise be brought to tax. The court went on to hold that Section 12 deals with income which is not included under any of the preceding heads; If the income is so included under any of these heads, it would fall outside Section 12. Whether an income is included under any of the preceding heads or not would depend on what kind of income it was. It follows that if the income is 'profits and gains of profession', it cannot come under Section 12. Section 12 does not say that an income which escapes taxation under a preceding head will be computed under it for chargeabilky to tax. It only says--and this is most important--that an income shall be chargeable to tax under the head ' other sources', if it does not come under any other head of income mentioned in the Act. Having regard to the above conclusion, the court then proceeded to consider if such income which falls under the fourth head, i.e., ' Profits and gains of business, profession or vocation ', could be charged to tax when it is received at a time when the assessee is not . carrying on the profession and held that:
'Section 3 states that ' Tax......shall be charged......in accordance with, and subject to the provisions of, this Act in respect of the total income '. This section does not, in our opinion, provide that the entire total income shall be chargeable to tax. It says that the chargeability of an income to tax has to be in accordance with and subject to the provisions of the Act. The income has, therefore, to be brought under one of the heads in Section 6 and can be charged to tax only if it is so chargeable under the computing section corresponding to that head. Income which comes under the fourth head, that is, professional income, can be brought to tax only if it can be so done under the rules of computation laid down in Section 10. If it cannot be so brought to tax, it will escape taxation even if it be included in the total income under Section 4. '
4. The Indian Income-tax Act, .1922, was repealed and substituted by the Income-tax Act, 1961 (Act No. 43 of 1961), which came into force on the 1st day of April, 1962. During the period relevant for the purpose of this writ petition it is this latter Act that was in force. Section 25 of the old Act made provision for assessment in case of discontinued business, profession or vocation. Under the new Act the corresponding provision is contained in Section 176. That section in so far as it is relevant for our purpose reads as follows :
' 176. (1) Notwithstanding anything contained in Section 4, where arty business or profession is discontinued in any assessment year, the income of the period from the expiry of the previous year for that assessment year up to the date of such discontinuance may, at the discretion of the Income-tax Officer, be charged to tax in that assessment year.
(2) The total income of each completed previous year or part of any previous year included in such period shall be chargeable to tax at the rate or rates in force in that assessment year, and separate assessments shall be made in respect of each such completed previous year or part of any previous year.
(3) Any person discontinuing any business or profession shall give to the Income-tax Officer notice of such discontinuance within fifteen days thereof.
(4) Where any profession is discontinued in any year on account of the cessation of the profession by, or the retirement or death of, the person carrying on the profession, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the aforesaid person had it been received before such discontinuance...... '
5. Under Sub-section (4) of Section 176 provision is made to include any sum received by a person after he has discontinued the profession as income of the recipient and charged to tax accordingly in the year of receipt on certain conditions. Primarily such sum was to be included in the total income of that person and was exigible to tax, if it was liable to be included, had it been received before such discontinuance. Further, for becoming exigible to tax the discontinuance of the profession should have been on account of :
(1) The cessation of the profession by the person ;
(2) the retirement of the person; or
(3) the death of the person.
6. Mr. Dasaratharama Reddy, learned counsel for the petitioner, contends that for Sub-section (4) to be attracted, the discontinuance of the profession should have been on account of the retirement or death and not otherwise. The expression ' any profession is discontinued in any year ' is followed by one of the three modes by which the discontinuance of profession may occur--one of which is a cessation of the profession by the person, another is discontinuance by retirement and the third is discontinuance on account of death. After the expression ' cessation of the profession by ' there occurs a comma (,) and is followed by the disjunctive word ' or ' and then occur the words ' the retirement or death of the person '. In my view the correct way of reading that clause is as follows :
'Where any profession is discontinued in any year on account of the cessation of the profession by the person carrying on the profession, or where a ay profession is discontinued in any year on account of the retirement of the person or where any profession is discontinued in any year on account of the death of the person.'
7. The expression ' on account of ' governs cessation of the profession, retirement or death, equally. I, therefore, have no hesitation in rejecting this contention of the petitioner.
8. The next contention of the petitioner is that, in order to attract Clause (4) of Section 176, the discontinuance of the profession should be permanent discontinuance. In support of this contention he relies upon the context in which Section 176 occurs. According to the learned counsel, Section 176 occurs in Chapter XV which deals with 'Liability in special cases'. Chapter XV is divided into various sub-heads ' A ' to ' O '.
9. ' A ' deals with liability of legal representatives, ' B ' with representative assessees--general provisions, 'C' with representative assessees--special cases, ' D ' with representative assessees--miscellaneous provisions, ' E ' with executors, ' F ' with succession to business or profession, ' G ' with partition, ' H ' with profits of non-resi_dents from occasional shipping business,'!' with recovery of tax in respect of non-residents, 'J' with persons leaving India, ' K ' with persons trying to alienate their assets, ' L ' with discontinuance of business, or dissolution, ' M ' with private company in liquidation, ' N ' with royalties and copyright and ' 0 ' with liability of State Governments. According to the learned counsel, Section 176(4) occurring under the head ' Discontinuance of business, or dissolution, in the context could only mean discontinuance of business or profession wholly. The discontinuance should be of a permanent character and should not be a temporary discontinuance of profession which may be resumed later. Such temporary discontinuance would constitute suspension of the profession and not discontinuance of the profession in the strict sense of the term. I am unable to agree with this contention. Discontinuance of a profession or business may be either temporary or permanent. It may be for a short or long duration. ' Discontinuance ' is defined as ' to cease to continue, to put an end to, to leave off, to stop, to cease, to be separated'. All that it indicates is that the profession or business is stopped. But the length of time for which it is stopped is not one of the elements that enters into the concept of discontinuance. It is only the factum of stoppage that is relevant. Further, the discontinuance that is contemplated by Sub-section (4) of Section 176 is discontinuance on account of cessation of the profession by the person or by retirement or by death. If the discontinuance is on account of death, then there can be no doubt that it is a permanent discontinuance. But if the discontinuance is by retirement, nothing prevents the person who has retired from resuming the profession. Ss also, if the discontinuance is by cessation whether voluntary or involuntary, it cannot be said that the discontinuance is permanent, for a person can always resume his business or profession if he has voluntarily ceased to carry on that business or profession; if it is involuntary on account of constitutional disability he may resume the profession no sooner than the disability ceases. The discontinuance of the profession occurred in the case of the petitioner on account of his being appointed a judge of the High Court, which necessitated the cessation of his profession. In fact in the case of the petitioner, no sooner than he retired as a judge of the High Court he informed the Bar Council that he is resuming practice. The question whether it is voluntary or involuntary, in my view, has no bearing on the application of Sub-section (4) of Section 176. The word 'cessation' is defined in Chambers' Twentieth. Century Dictionary as ' a ceasing or stopping ; rest; or a pause '. If it also means a ' rest ' or ' pause ' then obviously it cannot mean total stoppage ; pause is for a limited period of time. In my view, both the words ' discontinuance ' and ' cessation ' in the context in which they are employed take in both ' temporary discontinuance ' as well as ' permanent discontinuance '. The context in which Section 176 occurs does not necessarily point to total discontinuance. So far as the other heads occurring in Chapter XV are concerned, the deal with different contingencies and different situations. Even under the head ' Discontinuance of business or dissolution ' it is not as if only cases of total abatement or permanent discontinuance of business or profession for ever only are contemplated. Nothing would have been more easier for Parliament to declare under Sub-section (4) of Section 176 that it applies only to total discontinuance of business or profession.
10. Mr. Dasaratharama Reddy, learned counsel for the petitioner, however, relied strongly upon Commissioner of Income-tax v. Sarat Chandra Bose : 18ITR669(Cal) . That was a case arising under Section 25(3) of the. Indian Income-tax Act, 1922. The assesses therein, Sri Sarat Chandra Bose, having been arrested for his political activities and detained for several years, received certain income during the period when he was not practising on account of his detention in jail. The question arose whether that income was income from profession. There it was contended by the revenue that there was no discontinuance of profession, but only suspension of profession and as such the assessee was not entitled to claim exemption of this income from tax. The court held that whether a man discontinues his practice or suspends it very largely depends upon the state of his mind and that is to a very large extent, if not altogether, a question of fact. But even while so holding for the purpose of application of Section 25(3), Justice Chatterjee held :
' I cannot accede to the argument of Dr. Gupta that there must be a complete cessation of the profession for the rest of a man's life in order to constitute discontinuance of a profession. If a member of the legal profession after giving up his profession and closing down his professional establishment changes his mind some years later and resumes practice then there was no discontinuance because according to the revenue authorities discontinuance means complete cessation of the profession for ever. In that view in the case of a profession complete cessation can only be predicated with the death of the assessee. That would be an unreasonable view to take in the case of a professional gentleman. The language of Section 25(3) does not warrant such an extreme contention. If such contention is sound then a professional man can never get the benefit of Section 25(3) until he dies and the relief can only be claimed or obtained by his legal representatives or his successor-in-interest.'
11. This was a converse case where the relief was opposed on the footing that unless the discontinuance was permanent no exemption from tax could be claimed and the relief was sought on the ground that even if the discontinuance is temporary, the assessee is entitled to relief. That decision, however, lays down that the word ' discontinued ' occurring in Section 25(3), does not necessarily mean permanent discontinuance; it takes in even suspension or temporary discontinuance of business or profession. In Justice Iqbal Ahmad, In re, the cessation of practice by Sri Iqbal Ahmed on his being appointed as a judge of the Allahabad High Court was construed as discontinuance of the profession and Section 25(3) was held attracted. If that be the meaning of the word 'discontinuance', I find no reason to hold otherwise in the context of Section 176(4). This provision was introduced on the recommendation of the Direct Taxes Administration Enquiry Committee in 1958-59, which is to the following effect.
' There is no provision in the law at present to assess the income received after the cessation of practice or retirement or death of the assessees carrying on a profession like Solicitors, Advocates, Doctors, Consulting Surveyors, Engineers, etc. The law should be amended in such a way that even on the assessee's cessation of his vocation or retirement from the profession or death income received after such cessation, retirement or death would be taxed. '
12. If the income received after the discontinuance of the profession is intended to be charged to tax, I find no reason why the income received on account of temporary discontinuance or cessation of practice of the profession should be excluded and only ia case of permanent discontinuance it should be made exigible to tax. If the principle behind this provision is that this income would have been exigible to tax if the person had continued in profession and it should not escape the liability of tax on account of that person discontinuing the profession, then the fact whether the discontinuance is temporary or permanent cannot have any bearing on the question of exigibility to tax.
13. Mr. Rama Rao, the learned counsel for the revenue, placed reliance upon a decision of the Calcutta High Court in Roma Bose v. Income-tax Officer and contended that, irrespective of whether the discontinuance of the profession was temporary or permanent, the income of the petitioner was liable to be included under the head ' Income from other sources ' and, therefore, the assessment is . correct. The learned single judge held that :
'Under Section 14 of the Income-tax Act, 1961, income and not heads of income, as under Section 6 of the Act of 1922, has been made chargeable to income-tax. If an income cannot be charged to income-tax under any of the heads mentioned in classes 'A to E of Section 14 of the 1961 Act, the 'same shall be chargeable to income-tax under the head ' Income from other sources' mentioned in class F of the said Section 14, under the express provisions of Section 56(1) of the 1961 Act. '
14. Thus, according to the learned judge :
' Thus, money received by a person on account of profits are gains of a profession which had been discontinued by him even prior to the year previous to that when he received the same, would be chargeable to tax under the provisions mentioned above. Where fees due to a barrister were realised in the accounting year subsequent to his death, the amount thus realised would be chargeable to income-tax in the assessment year relevant to the accounting year under the head 'Income from other sources' in view of the specific provisions of Section 56. Further, where the profession of a barrister was discontinued on account of his death, any sum received after the discontinuance shall, under the provisions of Section 176(4), be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt. '
15. In so far as this decision holds that such income is liable to be taxed under Section 176(4), I find myself in agreement. That decision, however, does not render any assistance for determining whether discontinuance of the profession should have been permanent or temporary to attract Section 176(4). That question did not come up for consideration there because discontinuance of the profession had occurred on account of the death of the assessee.
16. As regards the other contention of Mr. Rama Rao that this income is chargeable to tax as income from other sources, all that need be said is that neither the Income-tax Officer nor the Income-tax Commissioner chose to include that as income from 'other sources' and make him liable for tax on that ground. The tax was assessed having regard to Section 176(4) of the Act. It is, therefore, unnecessary to consider that contention of the revenue in this writ petition.
17. Having regard to the view I have taken that, irrespective of whether the cessation of the profession was for a short or long period and irrespective of whether the discontinuance of the profession was temporary or permanent, the assessee would be liable to pay tax for the income received by him on account of the profession which he has discontinued. This writ petition fails and is accordingly dismissed, but in the circumstances of the case without costs. Advocate's fee Rs. 250.