Law:

Section:

Section 10(3) of the Income-tax Act, 1961 [Corresponding to section 4(3)(vii) of the Indian Income-tax Act, 1922] - Casual and non-recurring receipts - Whether where assessee, who was a retired Judge, was appointed as an arbitrator to enquire into a case, remuneration received by assessee arose from exercise of occupation of arbitrator and therefore, assessee could not claim exemption under section 4(3)(vii) of 1922 Act - Held, yes FACTS The assessee who was a member of Indian Civil Services, after retirement had been asked by the State Government to serve as an arbitrator for enquiring and reporting about a dispute, as the Government proposed to take action under section 234 of the Madras Local Boards Act, 1920, and to refer the dispute to an arbitrator for enquiry and report. He was also informed that he would be paid a lump sum fee of Rs. 3,000 for the work. He accordingly worked as an arbitrator and he received the written statement from both sides, heard evidence and arguments and submitted his report to the Government and was paid the sum of Rs. 3,000, the remuneration promised to him for the work. For the reassessment year, 1942-43, he claimed exemption under section 4(3)(vii), regarding the Rs. 3,000 got as remuneration or fee for the arbitration work. The ITO held that he was not entitled to exemption from assessment under section 4(3)(vii) and that the above amount was taxable. The assessee appealed, and the AAC held that the amount was taxable as salary or remuneration and was not a casual and non-recurring receipt. On second appeal, the Tribunal held that the said sum would fall within the purview of section 4(3)(vii) and would not be taxable, and directed that the total income of the assessee should be reduced by the said amount. On reference: HELD It was obvious that this arbitration business in which assessee was engaged for some months occupied and engaged his time and attention for those months and that he took up the business in order to obtain wealth, namely, Rs. 3,000 though not to seek his livelihood, as he was evidently having a comfortable living even from his pension and investments. If assessee himself was asked during the period he was…

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