# P. KRISHNA MENON v. THE COMMISSIONER OF INCOME-TAX

- **Citation:** [1959] Supp. 1 S.C.R. 133
- **Court:** Supreme Court of India
- **Decided:** 1956-03-08
- **Case number:** CIVIL APPELLA'rE JURISDICTION: Civil Appeal No. 401of1956
- **Bench:** Venkatarama Aiyar, Gajendragadkar, A. K. Sarkar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/p-krishna-menon-v-the-commissioner-of-income-tax-1606
- **Pages:** 9

## Headnote

Income-tax-Assessee teaching Vedanta without object of mak·
ing profit-If carrying on a vocation-Disciple making gift of money
-Whether receipt amounts to income from vocation-Indian Income·
tax Act, I922 (XI of r922), s. IO.
The assessee was teaching his disciples Vedanta philosophy
without any motive or intention of making a profit out of such
activity. One of his disciples made gifts of money to him on
several occassions. It was contended by the assessee that he was
not liable to tax on the amounts received as he was not carrying
on any vocation and as the receipts were not profits or gains.
Held that, in teaching Vedanta the assessee was carrying on
a vocation. It is not necessary for an activity to be a vocation
Commission., of
I ncom•-ra:r
v.
J air am Y alji
Y •nkalarama
Aiyar ].
October 7
134
SUPREME COURT REPORTS [1959] Supp.
r9j8
that it should be an organised activity or that it should be
--
practiced with a motive for making profit.
P. KrishHa A.fenon
Commissioner of Inland Revenue v. [14corporatcd Cot4ncit of
v. . .
Law Reporting, (r888) 3 Tax Cas. ro5, IIJ, followed.
Thd Cornu11ssror1er
.
.
of lncome-J'a*,
Mysore, 'fyavancore-Cochiu. and
Coorg. lJangdlors
Sarllar ].
H c/d, further, that the payments made by the disciple were
income received by the assessee from his vocation. In the case
of a voluntary payment, no tax can be levied on it if it had been
made for reasons purely personal to the donee and unconnected
with his office or vocation but it will be taxable if it was made
because of the office or the vocation of the donee. The question
is not what the donor thought he was doing but why the donee
received it. In the present case it is plain that it was because of
the teaching that the gift had been made.
CIVIL APPELLA'rE JURISDICTION:
Civil Appeal No.
401of1956.
Appeal by special leave from the judgment and
order dated March 8, 1956, of the Travancore-Cochin
High Court at.Ernakulam in l.T.R. No. 24of1954.
A. V. ViBwanatha Sa8tri, S. R. Ganapathy Iyer, J.B.
Dadachanji and G. GopalakriBhna, for t1ie appellant.
K. N. Rajagopala Sastri, R.H. Dhebar and D. Gupta,
for the respondent.
1958. October 7.
The Judgment of the Court was
delivered by
SARKAR .J.-The appellant who was a Superintendent
of Police in the service of the former Travancore
State, retit'ed sometime in 1940.
After retirement he
was spending his time in studying Vedanta philosophy
and expounding the same to such persons as were keen
on understanding it. He soon gathered about him a
number of disciples, one of whom was J. H. Levy of
London, U.K. Levy along with others used to receive
instructions in Vedanta from the appellant. He used
to come to Travancore from England at reg\1lar interv1tls and stay there for a few months at a time and
attend the discoursed given by the appellant and so
had the benefit of his teachings on Vedanta.
Levy had an account in Lloyd's Bank at Bombay.
On December 13, Hl41, Levy transferred the entire
balance standing to his credit in this account amounting to Rs. 2,41,103-11-3, to the credit of an account
which he got the appellant to open in his name in the
(1) S.C.R. SUPREME COURT REPORTS
135
same bank. Thereafter, from time to time Levy put in
z9sa
further sums into the appellant's aforesaid account in P. Krishna Menon
Lloyds Bank, Bombay. It appears that the payments
v.
so made up to August 19, 1951, amounted to about Rs. The Commission.r
4,50,000/-. From time to time the appellant got
01 Income-Tax,
ti
d f
h.
t
t th Ll d'
Mysore Travanmoneys trans erre
.rom
IS a~conn a , e
?Y
S
core-C~chin and
Bank, Bombay, to his account ma bank at Tnvan- Coorg, Bangalore
drum in Travancore.
This appeal arises out of orders for assessment to
Sarkar f.
income-tax passed against the appellant for the assessment yea.rs 1122, 1123 and 1124, all according to the
Malaya.lam era.
The respective accounting periods
according to the Gregorian calendar were from August
17, 1945, to August 16, 1946, August 17, 1946, to
August 16, 1947, and August

## Text

(1) S.C.R. SUPREME COURT REPORTS
133
of supply of limestone even a part from his work in the
Ga.ngapur quarry, and the agreement dated August 2,
1941, provides for his supplying limestone for the
furnaces at Kulti for a. period of 12 years and for
loading iron at Monoha.rpore for a. like period. There
was therefore at no time any agreement which operated as a bar to the carrying on of business by the respondent.
On a consideration of all the facts established, we
are of opinion that the receipt of Rs. 2,50,000 by the
respondent is a revenue receipt and is chargeable to
tax.
In the result, the appeal is allowed, the judgment of
the High Court set a.side and the order of the Tl'ibuna.l
restored. The respondent will pay the costs of the
appellant throughout.
Appeal allowed.
P. KRISHNA MENON
v.
THE COMMISSIONER OF INCOME-TAX,
MYSORE, TRA V ANCORE-COCJHIN AND
COORG, BANGALORE
(VENKATARAMA AIYAR, GAJENDRAGADKAR
and A. K. SARKAR, JJ.)
Income-tax-Assessee teaching Vedanta without object of mak·
ing profit-If carrying on a vocation-Disciple making gift of money
-Whether receipt amounts to income from vocation-Indian Income·
tax Act, I922 (XI of r922), s. IO.
The assessee was teaching his disciples Vedanta philosophy
without any motive or intention of making a profit out of such
activity. One of his disciples made gifts of money to him on
several occassions. It was contended by the assessee that he was
not liable to tax on the amounts received as he was not carrying
on any vocation and as the receipts were not profits or gains.
Held that, in teaching Vedanta the assessee was carrying on
a vocation. It is not necessary for an activity to be a vocation
Commission., of
I ncom•-ra:r
v.
J air am Y alji
Y •nkalarama
Aiyar ].
October 7
134
SUPREME COURT REPORTS [1959] Supp.
r9j8
that it should be an organised activity or that it should be
--
practiced with a motive for making profit.
P. KrishHa A.fenon
Commissioner of Inland Revenue v. [14corporatcd Cot4ncit of
v. . .
Law Reporting, (r888) 3 Tax Cas. ro5, IIJ, followed.
Thd Cornu11ssror1er
.
.
of lncome-J'a*,
Mysore, 'fyavancore-Cochiu. and
Coorg. lJangdlors
Sarllar ].
H c/d, further, that the payments made by the disciple were
income received by the assessee from his vocation. In the case
of a voluntary payment, no tax can be levied on it if it had been
made for reasons purely personal to the donee and unconnected
with his office or vocation but it will be taxable if it was made
because of the office or the vocation of the donee. The question
is not what the donor thought he was doing but why the donee
received it. In the present case it is plain that it was because of
the teaching that the gift had been made.
CIVIL APPELLA'rE JURISDICTION:
Civil Appeal No.
401of1956.
Appeal by special leave from the judgment and
order dated March 8, 1956, of the Travancore-Cochin
High Court at.Ernakulam in l.T.R. No. 24of1954.
A. V. ViBwanatha Sa8tri, S. R. Ganapathy Iyer, J.B.
Dadachanji and G. GopalakriBhna, for t1ie appellant.
K. N. Rajagopala Sastri, R.H. Dhebar and D. Gupta,
for the respondent.
1958. October 7.
The Judgment of the Court was
delivered by
SARKAR .J.-The appellant who was a Superintendent
of Police in the service of the former Travancore
State, retit'ed sometime in 1940.
After retirement he
was spending his time in studying Vedanta philosophy
and expounding the same to such persons as were keen
on understanding it. He soon gathered about him a
number of disciples, one of whom was J. H. Levy of
London, U.K. Levy along with others used to receive
instructions in Vedanta from the appellant. He used
to come to Travancore from England at reg\1lar interv1tls and stay there for a few months at a time and
attend the discoursed given by the appellant and so
had the benefit of his teachings on Vedanta.
Levy had an account in Lloyd's Bank at Bombay.
On December 13, Hl41, Levy transferred the entire
balance standing to his credit in this account amounting to Rs. 2,41,103-11-3, to the credit of an account
which he got the appellant to open in his name in the
(1) S.C.R. SUPREME COURT REPORTS
135
same bank. Thereafter, from time to time Levy put in
z9sa
further sums into the appellant's aforesaid account in P. Krishna Menon
Lloyds Bank, Bombay. It appears that the payments
v.
so made up to August 19, 1951, amounted to about Rs. The Commission.r
4,50,000/-. From time to time the appellant got
01 Income-Tax,
ti
d f
h.
t
t th Ll d'
Mysore Travanmoneys trans erre
.rom
IS a~conn a , e
?Y
S
core-C~chin and
Bank, Bombay, to his account ma bank at Tnvan- Coorg, Bangalore
drum in Travancore.
This appeal arises out of orders for assessment to
Sarkar f.
income-tax passed against the appellant for the assessment yea.rs 1122, 1123 and 1124, all according to the
Malaya.lam era.
The respective accounting periods
according to the Gregorian calendar were from August
17, 1945, to August 16, 1946, August 17, 1946, to
August 16, 1947, and August 17, 1947, to August 16,
1948. It appears that during these periods Levy had
deposited in the appellant's account at Lloyd's Bank
in Bombay the following respective sums: Rs. 13,304/-,
Rs. 29,948/- and Rs. 19,983/-. During the same periods
the appellant had obtained transfers of the following
respective sums from his Bombay account t.o his
Trivandrum account: Rs. 81,200/-, Rs. 47,000/- and
Rs. 37,251/-. The Income-tax Officer, Trivandrum,
assessed the appellant to tax on the latter amounts as
foreign income, i.e., income arising in India., and
brought into Travancore State in the relevant periods.
We a.re not concerned in this case with the assessment
made on other income of the appellant. The appellant appealed from these assessment orders to the
Appellate Assistant Commissioner who consolidated
them into one appeal. The Appellate Assistant Commissioner dismissed the appeal and confirmed the
orders of the Income-tax Officer. The appellant. then
went up in appeal to the Appellate Tribunal but that
appeal also failed.
The appellant thereafter obtained an order from the
Tribunal referring the following questions tu the High
Court of Travancore-Cochin for decision:
"(i) Whether the aforesaid receipts from John
H. Levy constitute income taxable under the Tra.va.ncore Income-tax Act, 1121? and
136
SUPREME COURT REPORTS [1959] Supp.
1958
(ii) Whether there are materials for the Tribunal
P K .-h-M
to hold that the deposits into the assessee's bank
.
m na
enon
•
B
b
b
J h
H L
f
9
v.
account m
om ay y
o n . . evy rom 1 41 as
The Commi<Sion" aforesaid represented income that accrued to the asseso/ Income-Ta., see outside Tra.vancore State?"
Mysore. Travan- The High Court answered the first question in the
core-Cochin and
ffi
·
I h
d h
d
'
Coorg, E!••g•lo" ~ rmahve.
t owever answer~ t e secon question
_
m favour of the appellant, holdmg that. he was carrySorkar J.
ing on a vocation or occupation in that State and the
income derived therefrom should be considered as
having arisen in Tra.vancore, and that therefore the
appellant was liable to be taxed not on the amounts
which he brought into Tra.va.ncore but on the amounts
which had been pa.id to the credit of his account at
Bombay by Levy during the relevant periods. The
appellant has now come up to this Court in appeal by
special leave against the answer given by the High
Court to the first question. We are not concerned in
this appeal with the answer given to the second question as it had been decided in favour of. the appellant
and there has been no appeal against it by the revenue
authorities.
We do not think that the case presents any difficulty. It has to be decided on the terms of the
Trava.ncore Income-tax Act, 1121 (Malayalam Era.),
but as the provisions of that Act a.re, for the present
purpose, identical with those of the Indian Income-tax
Act, 1922, it would be more convenient to refer to the
provisions of the latter.
Mr. Sastri, appearing for the appellant, has stated
that the case involves really two points. E'irst, was
the appellant carrying on a vocation? And secondly,
if he was, can the a.mounts with which we. a.re concerned, be said to be profits or gains of the vocation ?
"". e agree with his view of the case and proceed to
discuss these points.
The first question is, whether the appellant was
carrying on a vocation. Under s. 10 of the Incometa.x Act, 1922, tax is payable by an a.ssessee in respect
of the profit or gains of any profession or vocation
carried on by him. The facts foul'.d are that the appellant was studying Vedanta philosophy himself and
(l) S.C.R.
SUPREME COURT REPORTS
137
imparting the knowledge acquired by him as a result
1958
of his studies to such as cared to come and imbibe it.
----
Th
•
'd
t
h
th t tl
JI
t 1 d I'. f(ri.<l111a Mmou
ere is no evr ence o s ow
a
ie appe an· 1a
.
made it a condition that he would impart. such know- n,, cm;;,.issionn
ledge only to those who were prepared to pay for it.
of Income-T11:r.
We have therefore to prvceed on the basis that the Myw•. TraMnappellant was teaching hi,.; disciples V cdanta without c,,,, Cochin '~"J
any motive or intention of making a profit out of Coorg, nang " 071
such aeti vitv.
We find no difficulty in thinking that teaching is a
vocation if not a profession.
It is plainly so and it is
not necessary to discuss the various me:i.nings of the
word 'vocation' for the purpose or to cite authorities t.o
support this view.
Nor do we find any reason why, if
teaching is a. vocation, ten.ching of Vedanta is not. lt
is just. as much teaching, and therefore, a vocation,
as any other teaching. Jt is said that in te;1ching
Vedanta the appellant \rns only practising religion.
We are unable to see why teaching of Vedant.a as a
matter of religion is not carrsing on of a vocation. In
any case the question does not really arise, for, whether
the appellant was, in teaching Vedanta, practising
religion, is of course a finding of fact. It may be that
Vedanta could he taught as a practice of religion but
it could of course also be taught as any other philosophy or school of thought. The statement of case in
this case does not contain any finding that in teaching
Vedanta the appellant was practising religion.
It is said that in order that an activity may be
called a vocation for the purposes of the Act, it has to
be shown that it was an organised activity and that it
was indulged in with a motive of making profit; that
as the appellant's activity in teaching Vedanta was
neither organised nor performed with a view to making profit, he could not be said to be carrying on a
vocation. It is said that as the word 'vocation' ha.s
been used along with the words ' business and profes.
sion' and the object of a business and a profession is
to make a profit, only such activities can be included
in the word 'vocation' the object of which likewise is
to make a profit.
We think that these contentions
18
138
SUPHEME COURT R.EPORTS [1959] Supp.
x95B
Jack substance. We do not appreciate the significance
P. ,.,ishn" Menon of saying that in order to become a vocation a.n
v.
activity must be organised.
If by that a continuous,
1'he Co1n11iissio11er or as was said, a S)'Stem~tic activity, is meant, we
of lncom•·Tax, have to point out that it is well-known that a single
.\IJ'"0"· T.ava"· a.ct may a.mount to the carrying on of a. business or
core~Cachin and
c
·
I ·
d'
h'
·
Pro1ess10n.
t is unnecessary to iscuss t is quest10n
Coorg. BangalortJ further as we find no want of svstem or continuity in
s •• ~ .. J.
the activity of the a.ppella.nt. He had gathered a. large
number of disciples a.round him and wa.s instructing
them in Vedanta. regularly. Levy ca.me all the way
from England at regular intervals to obtain such
instructions. All this clearly indicates organisation
and system.
Again, it is well-established that it is not the motive
of the person doing an act which decides whether the
a.ct done by him is the carrying on of a business,
profession or vocation. If any business, profession or
vocation in fact produces an income, that is taxable
income and none the less because it was carried 011
without the motive of producing any income.
This,
we believe, i8 too well-established on the authorities
now to be questioned. It was dedded as early as 1888
in the case of the Commissioner of ]nl,and Rei·enue v.
Incorporated Council of Law Reporting{') and followed
ever since, that "it is not essential to the carrying on
of a trade that the people carrying it on should make
a profit, nor is it even necessary to the carrying on of
the trade that the people carrying it on should desire
or wish to make a profit". If that were not so, a
person carrying on what otherwise would be a business,
may say that he did not ca.rry on a business because
it was not his intention to make anv income out of it,
That would, of course, be absurd: The question is,
whether the aetiYity has actually produced an income
and it matters not whether that activity is called by
the name of business, profession, vocation or by any
other name or with what intention it was carried on.
The observation of Rowla.tt, J., in Stedeford v. Beloe (')
to which ws were referred by Mr. Sastri, that there
eould be no tax on pension granted to a retired
(1) (1888) 3 Tu Cas. 105, n3.
(2) (1930) 16 Tax Cas. 505.
(1) S.C.R.
SUPREME COURT REPORTS
139
headmaster as " there is no background of business in
z9,a
it", was clearly not intended to lay down that without P K .-h- llf
a profit motive there could be no business, profession · · "'·' :'." ·mo"
or vocation. The pension could be taxed only if it had Tlte cormn;ssinn..,.
a.risen out of the office and the only point decided was of Income.Tar,
that it had not so arisen as the headmaster held no Mysore, 1"rava11office, having retired earlier at the date the pension core-Cochin atid
h d b
d
'
.
J
H
. Coo1·g, Brmga/o,.
a
een grante : see the same case m t ie
ouse of
Lords(1).
'Ve think therefore that the teaching of
Sarkar J.
Vedanta by the appellant in this case can properly be
called the carrying on of a vocation by him.
Then the other point· to be decided is, whether the
payments made by Levy were income received by the
appellant from his vocation of teaching Vedanta. A.
very large number of authorities, both Indian and
English, have been pressed upon us in the course of
the argument. These cases illustrate the application
of the well-settled principle that in the case of a voluntary payment, no tax can be levied on it if it had been
made for reasons purely personal to the donee and
unconnected with his office or vocation while it will be
taxable if it was made because of the office or vocation
of the donee.
We do not consider it profitable to
discuss them in this case.
Also it seems to us that the
present case is too plain to require any authority. The
only point is, whether the moneys were received by
the appellant by virtue of his vocation. Mr. Sastri
contended that the facts showed that the payments
were purely personal gift.s. He drew our attem1on to
the affidavit of Levy where it is stated" all sums of
money paid into his account by me have been gifts to
mark my esteem and affection for him and for no
other reason".
But Levy also there said, "I have had
the benefit of his teachings on Vedanta". It is
important to remember however that the point is not
what the donor thought he was doing but why the
donee received it. So Collins M. R. in Herbert v.
McQuade (2), referring to Inland Rei1enue v. Stt·ong (3),
said at p. 649:
"Now that judgment,
whether or not the
(1) (1932) A. C. 388.
(2) (1902) 2 K.B. 631.
(3) (1878) 1 Tax Cas. 207.
140
SUPREME COURT REPORTS [1959] Supp.
1958
particular facts justified it, is certainly a.n affirmation
-
of a. principle of law that a. payment ma.y be liable to
I'. !(;ishna Menon.
t
1 h
h "t .
1
th
t fth
mcomc. ax a t oug
I
1s vo unta.ry on
e pa.r o
e
TheC.,:,~;,,;on,. persons who made it, a.nd that the test is whether.
of Inco•"·Tax. from the standpoint of the person who receives it, it
Mysore, TraMn· accrues to him in virtue of his office ; if it does, it does
core-Cochin and not matter whether it was voluntary or whether it wa.s
Coor1. Ban11a1o" compulsory on the part of the persons who paid it.
S•rA., ;.
· That seems to me to· be the test ; and if we once get to
this-that the money has come to or accrued to, a
person by virtue of his office-it seems to me that the
liability to income tax is not negatived merely by
reason of the fa.ct that there was no legal obligation
on the pa.rt of the persons who contributed the money
to pay it."
It is well established that in cases of this kind the
real question is, as Rowla.tt J. put it in Reed v.
Seymour (1 ), " But is it in the nature of a personal gift
or is it a remuneration?", an observation which was
quoted with approval by Viscount Cave, L. C. when
the case went up to the House of Lords with the addition " If the latter, it is subject to the tax ; if the
former, it is not": see Seymour v. Reed (').
We find
it impossible to hold in this case that the payments to
the a. ppella.nt had not been ma.de in consideration of
the teaching imparted by him. Levy admitted that
he had received benefit from the teaching of the appel.
la.nt. It is plain to us that it was because of the
teaching that the gift had been ma.de. It is true that
Levy said that he ma.de the gifts to mark his esteem
and affection for the appellant. But such emotions and
therefore the gifts, were clearly the result of the tea.oh.
ing imparted by the appellant. Mr. Sastri contends
that that may be so, but we have no right to foJ:ow
the successive causes and as a. result thereof link the
gift with the teaching. An argument of this kind
seems to have been advanced in Bklkiston v.·Cooper (')
and dealt with by Lord Ashbourne in the following
words: "It was suggested that the offerings were made
as personal gifts to the Vicar as marks of esteem and
(1) (1926) I K.B. 588.
(2) (1907) A.C. 554·
(3) (1909) A.C. 104.
(1) S.C.R. SUPREME COURT REPORTS
141
respect. Such reasons no doubt played their part in
z95a
obtaining and increasing the amount of the offerings, P K .-,.- 111
but I cannot doubt that they were given to the vicar . ns :.a
enoN
as vicar and that they formed part of the profits The Commissi0tur
accruing by reason of bis office."
We have no doubt of Jnco,,,e-Tax,
in this case that the imparting of the teaching was the Myson, ~ravan
causa causans of the ma.king of the gift; it was not ccor1-Co8' 11'"
0
1"d
l
,
Th
·
OOff:,
ongo o,.
mere y a causa sine qua non.
e payments were
repeated and ca.me with the same regularity as Levy's
Sarka• .f.
visits to the appellant for receiving instructions in
Vedanta. We do not feel impressed by Mr. Sa.stri's
contention that the first payment of Rs. 2,41,103-11-3
was too large a. sum to be paid as consideration. In
a.ny case we are not concerned in this case with that
payment. We a.re concerned with payments which
are of much smaller a.mounts and as to which it has
not been said that they were too large to be a consideration for the teaching.
And one inust not forget
that these a.re cases of voluntary payments a.nd the
question of t,he a.ppra.isement of the value of the
teaching received in terms of money is not very
material. If the first payment was too big to have
been paid for the teaching received, it was too big to
have been given purely by way of gift.
In the view that we take, namely, that the payments with which we a.re concerned, were income
arising from the vocation of the appellant as a teacher
of Vedanta, no question of exemption under s. 4(3)(vii)
of the Act a.rises. In order that a payment may be
exempted under that section, it has to be shown that
it did not arise from the exercise of a vocation.
In the result, we have come to the conclusion that
this appeal fails and it is dismissed with costs in this
Court.
Appeal dismiast.d.