LEACH, C.J. - The assessee is a merchant dealing in hides and he carries on his business in the City of Madras. In the year 1938 one Nawab C. Abdual Hakim died, leaving a large estate. Disputes arose among the heirs with regard to the division of the properties left by the Nawab. The result was that the heirs chose five gentlemen of the same community to act as arbitrators and assist in the distribution of the assets. The assessee was one of the five gentleman, who have been referred to in these proceedings as 'the arbitrators.' The arbitrators did a considerable amount of work in connection with the administration of the estate, and when at a later stage there were proceedings in this Court in regard to the partition, Gentle, J., decided that a sum of Rs. 87,000 (arrived at on a percentage basis should be divided among the five arbitrators. The assessees share came to Rs. 17,400. It was not possible to pay to the arbitrators the full amount at once and they received their shares in installments spread over a number of years. The second installment which was paid to the assessee was Rs. 7,000 and it was paid during the year of account 1940-41. The Income-tax Officer decided that the assessee was liable to income-tax in respect of this sum and consequently assessed him thereon. The Appellate Assistant Commissioner agreed with the Income-tax Officer, but the Income-tax Appellate Tribunal, Calcutta Bench, reversed the orders of the Income-tax authorities on the ground that the payment represented a receipt of a casual and non-recurring nature. At the instance of the Commissioner of Income-tax, the Tribunal has referred to this Court for decision the following question :-
'Whether the sum of Rs. 7,000 being the assessees share of second installment of the remuneration of the arbitrator was not assessable as income, profit and gains of the assessee during the previous year and whether the assessee is entitled as regards this income to exemption under section 4(3)(vii) of the act as receipt not being receipts arising from business or the exercise of a profession, vocation or occupation, which are of a casual and non-recurring nature.'
In the course of the arguments certain English cases have been referred to, but we do not regard them as being really helpful because the schemes of the two Acts are not identical. In fact there is considerable divergence here. Under sub-section (1) of Section 4 of the Indian Act, the tax is levied upon the income, profits and gains of the previous year. Sub-section (3) says that the income, profits or gains falling within specified classes shall note included in the total income of the person receiving them. Clause (vii) exempts -
'any receipts 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 there remuneration of an employee.'
In deciding whether this sum of Rs. 7,000 is taxable the Court can only have regard to the provisions of Section 4 of the Act.
Now it is clear that the Rs. 7,000 is not a receipt arising from the exercise of a profession, vocation or occupation. As we have already pointed out, the assessee is a merchant dealing in hides and his agreement to act as an arbitrator was entirely apart from his business. When he agreed to assist in settling the differences of the heirs of the Nawab no stipulation was made for remuneration. He obviously consented to act as he was a friend of the family; but it turned out that the task involved far more time that was anticipated and this was the reason why Gentle, J., decided to grant the arbitrators a reward for their services. There was no obligation to remunerate the arbitrators and if Gentle, J., had refused to sanction remuneration nothing would have been payable. In out opinion the facts of this case how that this is a receipt of a casual and non-recurring nature. It has been said that the assessee may act as an arbitrator in another case. That may be so; but he is not a professional arbitrator and it is very unlikely that he will be called upon to act in a case like the one referred to. There can be no rule laid down with regard to what is of a casual and non-recurring nature. Each case must be decided on its particular facts. We think that in the circumstances of this case the Income-tax Appellate Tribunal took the correct view. Therefore the answer to the question referred is that the Rs. 7,000 is not assessable. The assessee has succeeded and he is entitled to his costs, Rs. 250.
Reference answered accordingly.