# P. Ram Reddy and A v. V. Nair for the

- **Citation:** [1976] 1 S.C.R. 1017
- **Court:** Supreme Court of India
- **Decided:** 1975-09-29
- **Case number:** Civil Apeal No. 30 of 1971
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/p-ram-reddy-and-a-v-v-nair-for-the-6464
- **Pages:** 5

## Headnote

1017
A
COMMISSIONER OF EXPENDITURE TAX, ANDHRA PRADESH
f
v.
B
c
f
D
E
F
G
H
SHRI PVG RAJU, RAJAH OF VIZIANAGARAM
September 29, 1975
LV. R. KRISHNA lYER AND A. C. GUPTA, JJ.]
Expenditure Tax Act. (29 of 1957), s. 5 (a) and (j) -
Politics if a professio1~ -
Gratuitous paynz.ents towards election expenses of party c<indidates.
and td office bearers ~ If 'donation'.
Under s. 5 (a) and (j) of the Expenditure Tax Act, 1957. no expenditure tax
shall be payable on any expenditure incurred by the assessee wholly and txclu-·
sively for the purpose of his business. profession or vocation, and on any expendi-·
ture incurred by the a9S'essee by way of donation.
The respondent-assessee was the Chairman of the State socialist Party and
politics was his profession or occupation.
He, is a wealthy socialist and spent
Rs. 38,832/- towards election expenses of other candidates of his party,
and
gave Rs. 47,867 / .. to the office-bearers of his party to meet the expenses involved.
in party work.
HELD: The two amounts are eligible 'for exclusion from expenditure tax.
[1021 BJ.
(1) Under modern conditions, politics is a profession or occupation.
[1020 q
(2) But the expenses incurred on behalf of other candidates cannot be the
assessee's professional expenses.
[1020 D]
·
(3) The amounts, however, fall under s. S(j) of the Act.
When a pe.rson
gives. money to an_other without any_ material return, he donates that sum.
Therefore, when the assessee gave money to the candidates of his party for
their elections exoe-nses, it was money gratuitously given,
that is· he
made
donations.
[1020 E-G]
( 4) Similarly, tile amo.unts paid to office-bearers of the party were not for
any material return.
They were for loyalty or gratitude.
Wholly motiveless
donation is rare but 1naterial return alone negates a gift or donation. Therefore,
they also were outright gifts.
[1021A-<CJ

## Text

1017
A
COMMISSIONER OF EXPENDITURE TAX, ANDHRA PRADESH
f
v.
B
c
f
D
E
F
G
H
SHRI PVG RAJU, RAJAH OF VIZIANAGARAM
September 29, 1975
LV. R. KRISHNA lYER AND A. C. GUPTA, JJ.]
Expenditure Tax Act. (29 of 1957), s. 5 (a) and (j) -
Politics if a professio1~ -
Gratuitous paynz.ents towards election expenses of party c<indidates.
and td office bearers ~ If 'donation'.
Under s. 5 (a) and (j) of the Expenditure Tax Act, 1957. no expenditure tax
shall be payable on any expenditure incurred by the assessee wholly and txclu-·
sively for the purpose of his business. profession or vocation, and on any expendi-·
ture incurred by the a9S'essee by way of donation.
The respondent-assessee was the Chairman of the State socialist Party and
politics was his profession or occupation.
He, is a wealthy socialist and spent
Rs. 38,832/- towards election expenses of other candidates of his party,
and
gave Rs. 47,867 / .. to the office-bearers of his party to meet the expenses involved.
in party work.
HELD: The two amounts are eligible 'for exclusion from expenditure tax.
[1021 BJ.
(1) Under modern conditions, politics is a profession or occupation.
[1020 q
(2) But the expenses incurred on behalf of other candidates cannot be the
assessee's professional expenses.
[1020 D]
·
(3) The amounts, however, fall under s. S(j) of the Act.
When a pe.rson
gives. money to an_other without any_ material return, he donates that sum.
Therefore, when the assessee gave money to the candidates of his party for
their elections exoe-nses, it was money gratuitously given,
that is· he
made
donations.
[1020 E-G]
( 4) Similarly, tile amo.unts paid to office-bearers of the party were not for
any material return.
They were for loyalty or gratitude.
Wholly motiveless
donation is rare but 1naterial return alone negates a gift or donation. Therefore,
they also were outright gifts.
[1021A-<CJ
CIVIL APPELLATE JURISDICTION: Civil Apeal No. 30 of 1971.
Appeal by special leave from the judgment and order dated the
19th February, 1970 of the Andhra Pradesh High Court in case
Reference No. 2 of 1967.
R. M. Mehta and S. P. Nayar for the appellant.
P. Ram Reddy and A. V. V. Nair for the respondent.
The Judgment of the Court was delivered by KRISHNA IYER, J.
Keynote though.
Politics and philanthropy may well fall victims to the contruction.
of s. 5(a) and (j) of the Expenditure. Tax Act, 1957 (the Act for
1018
SUPREME COURT REPORTS
[1976] 1 s.c.R.
:short) if we fall victim to the submission naively made, at the first stage,
by counsel for the State.
In fairness to him, we must state that later
he retracted from that position, and rightly so, for the Act, in spirit
and letter, does not intend this blow on the profession of politics or the
·disposition for donations.
A fair reading of the provisions in question convincingly excludes
from 'taxable expenditure' sums wholly and exclusively incurred for
the purpose of a profession or occupation carried on by the· assessee
and no modem man may dispute that politics is a profession or
occupation.
Likewise, expenditure by way of gift or donation ini:Urred by the assessec is also excluded and no politically conscious
soul will deny that donation to the party in a democracy squarely
comes within this exclusionary provision.
The factual l!J.lllrix
Expenditure tax under the Act was sought to be levied from the
:assessee PV,G Raju, the respondent before us.
Paradoxical, perhaps,
it may appear-but here is a case of a rich Maharaja practising the
. politics of socialism, spending
lavishly for
furthering his party's
popularity and the prospects of his fellow candidates at the elections
to the Andhra Pradesh Legislative Assembly.
This expenditure, falling
under two heads, wasl taxed by the ass~sing authority and upheld up
to the Tribunal level.
The Hi_gh Court, on reference, reversed the
findings on both counts and the Commissioner of Expenditure Tax,
1he appellant,, challenges the legality of this verdict.
The best beginning in stating the facts may well be to extract
:the questions of law referred by the Tribunal in its own words :
" ( 1) Whether on the facts and in the circumstances of
the case the expenditure of Rs. 38,832/- claimed
to be the amount incurred by the assessee for the
benefit of other candidates for election is excludible
from the taxable cxpentliturc either under Section
5(a) or under Section 5(j) of the
Expenditure
Tax Act?
(2) Whether ori the facts and in the circumstances of
the case the sum ol Rs. 47,867 /- claimed to
be
party expenses could be excluded from the taxable
expenditure of the assessee either
under
Section
5 (a) or under Section 5 ( j) of the Expenditure Tax
Act?
We have to assume the following facts as implied in
the
very
<JUestions referred to the High Court and from the attendant circum-
-stances.
They are :
(a) that the
respondent,
during the
relevant peri.od
was the Chairman of the State Socialist
Party
which
was interesting itsC!f in electoral politics;
A
B
c
D
E
F
G
H
(
...
'1
f
j
I
1
A
B
c
0
COMMR. EXPENDITURE TAJ<; v. PVG RAJU (Krishna Iyer,!.)
!019<
(b) the respondent was .a wealthy socialist;
( c) that he was meeting not only the expenditure of his
own elections but spending moneys for the benefit
of other candidates belonging to his party;
(d) that he was issuing cheques to the Secretary and
other office-bearers of his party to meet the expenses
involved in party work.
He expended Rs. 38,832/- for propelling the election prospects of
other party candidates during
the
election. Likewise,
he
gave
. Rs. 47,867 /-to his party through its office-bearers. ·. On these facts
the quesiion is whethe1 he is eligible for exclusion of the two sums
from expenditure tax either under s. 5~a) or under s. 5(j) of th eAct.
Consideration of the legal issue
It is appropriate to start with reading the relevant portion of
S· 5 of the Act :
"s. 5. No. expenditure-tax shall be payable under this
Act iu respect of any such expenditure as is referred to in
the following clauses, and such expenditure shall not
be
included in the taxable expenditure of an assessee ...
E
(a) any expenditure, whether in the nature of revenue
expenditure or capital expenditure, incurred by the assessee
wholly and
exclusively for the purpose of the
bnsiness,
profession, vocation or occupatio!J carried on by him or
for the purpose of earning income from any other source;
(b) to (i) ...
F
G
(j) any expenditure incurred by the assessee by
way
of, or in respect of any gift, donation or settlement on trust
or otherwise for the benefi! of any other person."
The assessec was Party Chairman and politics was undoubtedly his:
profession or occupation, it being admitted that his
interest
in
politics was not causal nor sporadic but abiding and ambitious.
The contention of the respondent which met with success beforethe High Court was that the election expenses of other candidates'
set up by him as Chairman of the Socialist Party, loosely described
as 'party expenditure', were incurred wholly .and exclusivelv for the
purpose of his 'profession' or 'occupation'.
So, the first point which
arrests our attention in examinjng this contention is as to whether
politics of the socialist brand or otherwise is a profession or occupation.
There can hardly be any doubt that it is either, or both. Harold
Laski treated politics as a science and wrote his well-known book
on the Grammar of Politics,, but the art of politics at a practical level~
H
has alsQ be~n the subject of· comment and has been praised an'd.
denounced on the basis that it is a profession. To Gandhiji it is
sacred as reljgion.
In Lincoln it rises to noble heights of statesman-
1020
SUPREME COURI' REPORTS
[1976] 1 s.c.R.
ship. 4nin, Nehru and a galaxy of other great visionaries 'and
makers and moulders of the moUem world have dedicated themselves
to politics as a profession. Of course in its vulgar and vicious manifestations, this occupation has been rega_rded by literary giants like
Dr. Johnson as 'the. last refuge of a scoundrel'. Robert Louis
.Stevenson has used barbed words : . 'Politics is" perhaps the only profession for which no prepara_ti_on is thought necessary
(Familiar
Studies of Men and Books, 'Yoshida-Torajiro'J.
George Ber:nard
.Shaw uses stinging language in Major Barbara : 'He knows nothing;
.and he thinks he _knows everything. That points clearly to a political
.career'. It is thus clear, without reference to the wealth of case-Jaw
relied on by the High Court, that politics has been a profession and,
_ indeed, under modern cuni!itions in India, perhaps the most popular-
.and uninhibited occupation-with its perils, of course. Law cannot
.take leave of realities and therefore s. 5(a) must bear the construction
xhat politics is a profession or occupation.
The next question is whether the expenditure incurred by the
.assessee for the election of candidates set up by him as Chairman
of his party can be legitimately regarded as incurred 'wholly and
exclusively' for the purpose of his profession
or occupation.' We
have grave doubts whether meeting the expenses of other candidates
.can be fulfilment of his professional
expenses,
but this
question
-deserves no deeper probo for the simple reason that s. 5 (j) embraces
the expenditure as it does answer the description of a
donation.
When a person gives money to another without any material return,
he donates that sum.
An act by ·which the owner of a
thing
·voluntarily transfers the titlti and p9ssession of the same from himself
to another, without any consideratioit, is a donation.
A
gift
or
gratuitous payment· is, in simple English, a donation.
We do not
require lexicographic learning nor precedential erudition to understand the meaning of what many people do every day, viz., giving
donations to some fund or other,. or to some person
or
other.
Political donations are not only common, but are assuming deleterious
dimensions in the public life of our country. It is
therefore clear
that when this Raja a$sessee gave ·money to the candidates of his
Party for them to meet their election expen,s.es. he . made donations.
Even if he met their election expenditure, it was money gratuitously
given on their behalf and tnerefore amounted to donation. Without
·strainin-g language, we reach the -natilral conclusion that what the
respondent expended for: the other candidates during the elections
was 'donation' in the language of the law. There is no snggestion
nor evidence . that· any materiaT·i:eturn was in contemplation
when
he. spent these sums.
Being a politicaJJv important man with plenty .
of. money and vitally interested in boosting· his Party's standing in
the State. he donated liberally for candid~tes set up by the party.
In this view s. 5 (j) aplies to these donations which earn exemption
from the expenditure tax.
·
The next item relates to snms given to the Socialist Party. It
is reasonable to ass~me th,at the amounts paid to the office-bearers
A
B
)
c
D
E
F
•
".
G
H
'
t
1
~
...
A
B
c
D
COMMR. EXPENDITURE TAX v. PVG RAJU (Krishna Iyer, J.) I 021
of the party were _without an eye on any material return other than
loyalty or gratitude.
The_y were outright gifts.
Indei:d, many rich
people out of diverse motives make donations to political parties.
The hope of spiritual benefit or political goodwill. the spontaneous
affection that benefaction brings, the popularisation of a good cause
or the prestige that publicised bounty fetches-these and other myriad
consequences or feelings mai not mar a donation to make it a grant
for a quid P!O quo. Wholly mqtiveless donati011 is rare, but material
return alone negates a gift or donation.
We need not investigate
the propl1iety or political donations 'unlimited' and often invisible.
All that we need consider is whether such sums
are gifts
and
donations or are non-gratuitous payments with a tag of return.
We
have no doubt that on the question as framed, and on the facts and
circumstances present, these sumi WJ!re paid purely as gifts
and
donations to his Party by the respondent. It is not surprising either,
because he was the Chairman of the said pl(rty, had a long and
liberal purse from which m- draw and a large circle of support to
build up in the long run~
The inevitable conclusion from our discussion is that both the
heads of elglenditure fall under s.5 (j) of the Act and, therefore, flow
out of th~sessable zone.
The ~gh Court's conclusion is sound
and the appeal deserves to be am is hereby dismissed, but without
costs.
V.P.S.
Appeal dismissed.
1127 SCI/75 -2,500-10-4-76-GIPF.