Case: Commissioner Of Income-Tax, Uttar Pradesh Vs. Manmohandas

duties to dispenses with the services of the Treasurer forthwith. The Treasurer was not to engage any person as his assistant or peon about whose character, conduct or reliability the manger of the Board of Directors of the Bank may have any objection. Shivnandan was a nominee of the Treasurer, but from the terms of his employment it appeared that he was working directly under the control and supervision of the Punjab National Bank. This Court held that the Treasurers relation to the Bank was that of a servant to the master, and the ministerial staff of the Cash Department appointed by him were also the employees in the Cash Department. It is difficult to regard the agreement in Shivnandan Sharmas case, 1955-1 SCR 1427 : ((S) AIR 1955 SC 404 ), as even substantially similar to the agreement in the present case between the Allahabad Bank and the Treasurer, so as to make the interpretation of the agreement a guide or a precedent in the interpretation of the agreement before us. 12. In Piyare Lal Adishwar Lals case, 1960-40 ITR 17 : (AIR 1960 SC 997 ), one Sheel Chandra was appointed Treasurer of the Central Bank for various branches on a monthly salary. Under the agreement between Sheel Chandra and the Bank, Sheel Chandra had to engage and employ all subordinate staff. He had the power to control, dismiss and change the staff at his pleasure but he could not engage or transfer any member of the staff except with the approval of the Bank and he had to dismiss any such member if so required by the managing director of the Bank or Agent of the office. The Treasurer was responsible for the acts and omissions of his representatives whom he was entitled to appoint at the various branches with the approval of the Bank, and he had agreed to indemnify the Bank against any loss arising from any neglect or omission on their part. But the Treasurer and his staff were under the direct control of the Bank. The agreement which was terminable by three calendar months notice in writing by either side, could in the event of any breach of any condition of the agreement by the Treasurer be terminated by the Bank forthwith. Having regard to the nature of his work and the control and supervision of the Bank over the Treasurer, it was held that the Treasurer was a servant of the Bank and the emoluments received by the Treasurer were in the nature of salary and assessable under S. 7 of the Income-tax Act and not profits and gain of business under S. 10. Some of the covenants of the contract between the Central Bank and the Treasurer are similar to the agreement under consideration in this appeal, but in Piyare Lal Adishwar Lals case, 1960-40 ITR 17 : (AIR 1960 SC 997 ), this Court founded its conclusion upon the existence of control and supervision of the Bank over the Treasurer and upon the power vested in the Bank to summarily dismiss the Treasurer in case of breach of any of the conditions of the agreement. 13. In the present case there is no covenant which either expressly or impliedly confers upon the Bank such control and supervision over the work done by the Treasurer, and the agreement is not liable to summary determination. His duties, liabilities and responsibilities are to be such as either by custom or contract usually devolve upon the Treasurers and those which are specified in the agreement. It is true that under Cl. (d) he has to transmit from one place to another place whenever so required, under such guard as may be provided by the Bank, all such money, cash, bullion, securities, cheques, notes hundies, drafts, orders and other documents, but that does not put the Treasurer under the general supervision of the Bank. 14. On a careful consideration of the covenants, we are of the view that the Treasurer was not a servant of the Allahabad Bank under the terms of the agreement, dated January 2, 1931, and the remuneration received by him was not "salaries" within the meaning of S. 7 of the Income-tax Act. But that is not sufficient to conclude the matter in favour of the assessee. The benefit of S. 24 (2) of the Indian Income-tax Act may be availed of by the assessee only if the loss sought to be set off was suffered under the head "Profits and gains * * in any business, profession or vocation". It is difficult to regard the occupation of the Treasurer under the agreement as a profession, for a profession involves occupation requiring purely intellectual or manual skill, and the work of the Treasurer under the contract cannot be so regarded. Occupation of a Treasurer is not one of the recognized professions, nor can it be said that it partakes of the character of a business or trade. In performing his duties under the agreement the assessee exercised his skill and judgment in making proper appointments and made arrangements for supervising the work done by the staff in the Cash Department of the Banks Branches. The remuneration received by him was for due performance of the duties and also for the guarantee against loss arising to the Bank out of the acts or omissions of the Cash and other staff of the Bank. Taking into consideration the nature of the duties performed, and the obligations undertaken, together with the right to remuneration subject to compensation for loss arising to the Bank from his own acts and omissions or of the servants introduced by him into the business of the Bank, the assessee may be regarded as following a vocation. The remuneration must therefore, be computed under S. 10 of the Income-tax Act and loss of profit suffered in that vocation in any year may be carried forward to the next year and be set off against the profit of the succeeding year.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]13. In the present case there is no covenant which either expressly or impliedly confers upon the Bank such control and supervision over the work done by the Treasurer, and the agreement is not liable to summary determination. His duties, liabilities and responsibilities are to be such as either by custom or contract usually devolve upon the Treasurers and those which are specified in the agreement. It is true that under Cl. (d) he has to transmit from one place to another place whenever so required, under such guard as may be provided by the Bank, all such money, cash, bullion, securities, cheques, notes hundies, drafts, orders and other documents, but that does not put the Treasurer under the general supervision of the Bank14. On a careful consideration of the covenants, we are of the view that the Treasurer was not a servant of the Allahabad Bank under the terms of the agreement, dated January 2, 1931, and the remuneration received by him was not "salaries" within the meaning of S. 7 of the Income-tax Act. But that is not sufficient to conclude the matter in favour of the assessee. The benefit of S. 24 (2) of the Indian Income-tax Act may be availed of by the assessee only if the loss sought to be set off was suffered under the head "Profits and gains * * in any business, profession or vocation". It is difficult to regard the occupation of the Treasurer under the agreement as a profession, for a profession involves occupation requiring purely intellectual or manual skill, and the work of the Treasurer under the contract cannot be so regarded. Occupation of a Treasurer is not one of the recognized professions, nor can it be said that it partakes of the character of a business or trade. In performing his duties under the agreement the assessee exercised his skill and judgment in making proper appointments and made arrangements for supervising the work done by the staff in the Cash Department of the Banks Branches. The remuneration received by him was for due performance of the duties and also for the guarantee against loss arising to the Bank out of the acts or omissions of the Cash and other staff of the Bank. Taking into consideration the nature of the duties performed, and the obligations undertaken, together with the right to remuneration subject to compensation for loss arising to the Bank from his own acts and omissions or of the servants introduced by him into the business of the Bank, the assessee may be regarded as following a vocation. The remuneration must therefore, be computed under S. 10 of the Income-tax Act and loss of profit suffered in that vocation in any year may be carried forward to the next year and be set off against the profit of the succeeding year.