Bombay High Court
Commissioner Of Income-Tax, Bombay ... vs Durga Khote on 11 September, 1951
Equivalent citations: AIR1952BOM241, (1952)54BOMLR207
Author: Chief Justice
Bench: Chief Justice
JUDGMENT FACTS One Mrs. Durga Khote (assessee), was a wellknown film actress. Her income for the financial year ending 31-3-1045, was computed under 3, 7, Income-tax Act by the Income-tax Officer at Rs. 1,29,748 after making an allowance of Rs. 8,000 oil account of expenses such as for costumes, conveyances, for the assessment year 1945 46. In the year of account the assesses was under contracts of service with several cinema companies. Under a contract dated 7-7-1944, with the Prabhat Co., she was engaged as an artist for two pictures for a period of 6 months from 1-10 1944. Her salary was fixed at Rs. 6,000 p. m. free of income-tax. It was agreed between the assessee and the Prabhat Film Co. that from MI-1944, onwards she would be allowed to work "for one picture outside" but that the Prabhat Film Co. should have "the first preference for work." There was a contract of service dated 4-4-1944, with India Film Circuit (Famous Films). Under that contract the assessee was to be paid lamp sum of Rs. 21,000. The following clauses of the contract are relevant : "We are already aware of your contract with Pradeep Pictures, Star Productions and the remaining work of the Ramnik Productions and we shall allow you to finish their work adjusting our programme of shooting accordingly." "You shall attend the rehearsals and shootings on the day punctually and give all your entire attention towards the work for which your services have been engaged." There was another contract dated 29.8.1944, with Ramnik Productions. Under this contract the assessee was engaged for 8 months. The following clause in the agreement is material : "That you agree to attend studios regularly as per company's notice for shooting (indoor as well as outdoor) in the day as well as in the night. And also to attend studios for rehearsals according to the Director's instructions." There were 2 or 3 other similar contracts. The assessee's income was computed by the Income-tax Officer as follows : Rs. Rs. I Prabbat Film Go. Net 80,000 Tax thereon 13,309 Grose 43.309 II Famous Films 21,000 III Star Productions Net 16,000 Tax thereon 1,057 11,057 IV Pradeep Pictures 82,000 V Ramnik Pioductions 21,838 1,29,748 On appeal by the assessee the Appellate Assistant Commissioner relying upon 18 T.C. 198 held that the assessee's income should have been computed under Section 10, Income-tax Act and allowed further expenses to the extent of Rs. 4,500 under Section 10(2) of the Act. On an appeal filed by the Department, the Tribunal agreed with the Appellate Assistant Commissioner that the assessee's income should be computed under Section 10, Income-tax Act. The following questions of law were referred to the High Court : (1) Whether the assessee's Income fell to be computed under Section 7, Income-tax Act or Section 10, Income-tax Act ? (2) IS outside evidence as to what the parties meant admissible for the interpretation of the assessee's contract; with the Prabhat Film Co. ? (3) If not, whether on the true interpretation of the assessee's contract with the Prabhat Film Co. the expression "free of income tax" meant, that the Prabhat Film Co., would only pay the taxes on the remuneration fixed in the contract of service or whether the Prabhat Film Co. agreed to pay such remuneration to the assessee as would leave to her after the payment of taxes the amount stated in the contract ? Chagla, C.J.
1. The only question that arises on this reference is whether the assessee's income falls to be computed under Section 7 or Section 10, Income-tax Act. The assessee Mrs. Durga Khote is admittedly a well-known film actress. In the year of account which is 1944 she entered into various contracts for serving with several film companies and the contracts wore to the effect that her services were lent for the purposes of acting in different films at a certain remuneration fixed in the contracts. The contention of the Department was that her income represented "salaries" paid by the various film companies and she should show her ret am under Section 7 and not under Section 10. On the other hand, the contention of the assessee was that her income arose out of the practice of her profession, which was that of a film actress, and therefore, her return was rightly shown under Section 10. The Tribunal upheld the contention of the assessee.
2. Mr. Joshi's contention is that if you look at the terms of the contracts, it is clear that a relationship of master and servant is established between the film companies and the assessee, and according to him if that relationship is establish, ed, then the assessee is a salaried servant of the film companies and the income she received was in the nature of her salaries. Now, the mere establishment of relationship of master and servant is not sufficient when we are dealing with a person who is practicing a profession, because in the course of the practice of that profession it may become necessary for the person to get himself or herself engaged to a particular master temporarily But even while be or she is so engaged, be or she is really practicing his or her profession and the service is merely incidental to that profession. The position is different when a professional person permanently accepts an employment and exchanges his profession for service.
It is clear on the facts of this case that Mrs. Durga Khote was not giving up her profession and wag not exchanging her profession for any service. It is in order to carry out her profession of a film actress that she entered into various contracts with the film companies. Her employment was temporary and incidental to her profession and she bad no intention permanently to engage herself with any company. She was completely fancy free after her contracts with the film companies were carried out to lend her services to any other company she desired. It is difficult to see how on the facts of this case it can ever be stated that she exchanged her profession for service and ceased to practice her profession and became a salaried servant of the various film companies, with whom she was working in order to practice her profession. Really speaking no authority is needed to establish this proposition, but there is a direct decision of English Courts in Dovies v. Braithwaite, (1933) 18 Tax cas 198. That was also a case of an actress and Rowlatt J. with respect rightly laid down the principle which should be applied to cases of this sort and this is what the learned Judge says (p. 200) :
". . . . what I say is that it seems to me that where one finds a method of earning a livelihood which does not contemplate the obtaining of a post and staying in it, but essentially contemplate a series of engagement and moving from one to the other -- and in the case of an actor's or actress's life it certainly involves going from one to the other and not going on playing one part for the rest of his or her life, but in obtaining first one engagement and then another, and a whole series of them -- then each of these engagements could not be considered an employment, but is a mere engagement in the course of exercising a profession. . . "
If Mr. Joshi were right, then even when a lawyer engaged himself to conduct a case ho would cease to be practicing a profession and would be employed by his client for the purpose of conducting his case. I hope such a suggestion will never be made that a lawyer ever becomes a servant of his client by thus carrying out his work and ceases to be practicing his profession.
3. The result is that we must hold that the assessee's income must be computed under Section 10 and not under Section 7, Income-tax Act. We, therefore, answer the questions referred to us in the following manner.
4. Question No. 1 : Under Section 10 of the Act.
5. The second and the third questions do not, therefore, arise, and need not be answered. The Commissioner to pay costs of the reference.
6. Reference answered.