Civil Appeal 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 section P Nayar for the appellant
P Ram Reddy and AVV Nair for the respondent
The Judgment of the Court was delivered by KRISHNA IYER J
Keynote thought
Politics and philanthropy may well fall victims to the contruction of section 5a and j of the Expenditure
Tax Act 1957 the Act for 1018 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 modern man may dispute that politics is a profession or occupation
Likewise expenditure by way of gift or donation incurred by the assessee 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 matrix Expenditure tax under the Act was sought to be levied from the assessee PVG 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 was taxed by the assessing authority and upheld up to the Tribunal level
The High Court on reference reversed the findings on both counts and the Commissioner of Expenditure Tax the 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 38832 claimed to be the amount incurred by the assessee for the benefit of other candidates for election is excludible from the taxable expenditure either under Section 5 a or under Section 5 j of the Expenditure Tax Act  2 Whether on the facts and in the circumstances of the case the sum of Rs 47867 claimed to be party expenses could be excluded from the taxable expenditure of the assessee either under Section 5a or under Section 5i of the Expenditure Tax Act  We have to assume the following facts as implied in the very questions referred to the High Court and from the attendant circumstances
They are a that the respondent during the relevant period was the Chairman of the State Socialist Party which was interesting itself in electoral politics 1019 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 38832 for propelling the election prospects of other party candidates during the election
Likewise he gave Rs 47867 to his party through its office bearers
On these facts the question is whether he is eligible for exclusion of the two sums from expenditure tax either under section 5a or under section 5j of the Act
Consideration of the legal issue It is appropriate to start with reading the relevant portion of s 5 of the Act section 5
No expenditure tax shall be payable under this Act in 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
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 business profession vocation or occupation carried on by him or for the purpose of earning income from any other source b to i 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 benefit of any other person
 The assessee 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 before the 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 exclusively for the purpose of his profession  or occupation 
So the first point which arrests our attention in examining 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 has also been the subject of comment and has been praised and denounced on the basis that it is a profession
To Gandhiji it is sacred as religion
In Lincoln it rises to noble heights of statesman 1020 ship
Lenin Nehru and a galaxy of other great visionaries and makers and moulders of the modern world have dedicated themselves to politics as a profession
Of course in its vulgar and vicious manifestations this occupation has been regarded 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 preparation is thought necessary Familiar studies of Men and Books Yoshida Torajiro 
George Bernard 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 law relied on by the High Court that politics has been a profession and indeed under modern conditions in India perhaps the most popularand uninhibited occupation with its perils of course
Law cannot take leave of realities and therefore section 5a must bear the construction that 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 probe for the simple reason that section 5j 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 title and possession of the same from himself to another without any consideration 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 assessee gave money to the candidates of his Party for them to meet their election expenses he made donations
Even if he met their election expenditure it was money gratuitously given on their behalf and therefore amounted to donation
Without straining language we reach the natural conclusion that what the respondent expended for the other candidates during the elections was donation  in the language of the law
There is no suggestion nor evidence that any material return was in contemplation when he spent these sums
Being a politically important man with plenty of money and vitally interested in boosting his Party s standing in the State he donated liberally for candidates set up by the party
In this view section 5j aplies to these donations which earn exemption from the expenditure tax
The next item relates to sums gives to the Socialist Party
It is reasonable to assume that the amounts paid to the office bearers 1021 of the party were without an eye on any material return other than loyalty or gratitude
They were outright gifts
Indeed 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 may not mar a donation to make it a grant for a quid pro quo
Wholly motiveless donation is rare but material return alone negates a gift or donation
We need not investigate the propriety 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 sums were 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 party had a long and liberal purse from which to 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 expenditure fall under s5j of the Act and therefore flow out of the assessable zone
The High Court s conclusion is sound and the appeal deserves to be and is hereby dismissed but without costs
VPS Appeal dismissed


Summary:
Under section 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 exclu sively for the purpose of his business profession or vocation and on any expenditure incurred by the assessee 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 38832 towards election expenses of other candidates of his party and gave Rs 47867 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 B 1 Under modern conditions politics is a profession or occupation
1020 C 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 section 5j of the Act
When a person gives money to another without any material return he donates that sum
Therefore when the assessee gave money to the candidates of his party for their elections expenses it was money gratuitously given that is he made donations
1020 E G 4 Similarly the amounts 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 material return alone negates a gift or donation
Therefore they also were outright gifts
1021 A C