Kalpesh Classes

Meaning of profession​​ 

A vocation, as normally understood, is a calling in which a person passes his life. It may​​ even be stated to a way of living or a sphere of activity for which one has a special fitness, though it is not necessary that the activity should be indulged in for the purposes of livelihood [K. Ramaswami Gounder​​ v.​​ CIT (1987) 163 ITR 94 (Mad.)].​​ Social​​ work and preaching reli­gion may amount to vocation. Teaching is a vocation if not a profession, a teaching of vendents even as a matter of religion amounts to carrying on a vocation [P. Krishna Mohan v. CIT (1959) 35 ITR 48 (SC)]. Profession vs. Occupation.​​ Profession has to be distinguished from occupation, which tantamount to "business", viz., an occupation which substantially is the arrangement for sale of goods.

All professions are businesses but all businesses are not professions. There should be some special qualification of a person apart from skill and ability, which is required in carrying on any activity which could be considered as profession.​​ This could be by having education in a particular system either in a college or university or it may be even by experience. In the case of a broker, the activities are carried on either under a written agreement or even verbal agreement in respect of different constituents and the activities, therefore, would amount to business.​​ 

Meaning of vocation

Preaching of sermons in church by representative or employee of church is an integral part of church. Activities of church amount to a vocation.​​ Its income falls under head "profits and gains of business or profession" because profession includes vocation.​​ Church entailed to depreciation on church building. ​​ [1984] 145 ITR 0786- All Saints Church vs. CIT (Karnataka High Court)

Clause.2 (36) defined " profession as including " vocation ". Even the dictionary meaning of the word " vocation " is " person's trade or profession".​​ The teaching of Vedanta had been held by the Supreme Court to be a vocation.​​ The preaching of sermons in the church by the representative of the church could not be different from the teaching of Vedanta or any other teaching. The teaching or preaching may be done by a representative or any employee of the church. It did not matter who did it, so long as it was considered to be an integral part of the church. The disciples went to the church and not to the person who taught or preached. The activities of the assessee-church, therefore, amounted to a vocation. The assessee-church was, therefore, entitled to depreciation in respect of the church building. [1984] 145 ITR 0786- ​​ All Saints Church vs. CIT (Karnataka High Court)

A vocation is only a way of living or a sphere of activity for which one has special fitness. It is not necessary that such activity should be one indulged in for earning a livelihood before it can be called ‘vocation’. Nor can it be said that a person cannot have more than one vocation.​​ A motive for making a profit is not an essential requisite of a vocation.​​ The concept "vocation" broadens the scope of s.28 in the context of the decision of the Supreme Court in P. Krishna Menon v. CIT where even voluntary contributions received by retired civil servant engaged in teaching Vedanta without its being organised activity on his part were held taxable. Even politics is regarded as a profession.​​ 

Assessee was propagating religious faith and publishing newspaper. Donations received by assessee from USA for furtherance of his objects is not casual and non-recurring receipt. It is taxable as receipts arising from the carrying on of a vocation. [1985] 156 ITR 0412A ​​ George Thomas (K.) (Dr.) vs. CIT (Supreme Court of India)

The appellant, who was till 1953 a lecturer in a college in Kerala, had his education in the USA during 1953 to​​ 1957 and took his Ph. D degree. He associated himself with the Indian Gospel Mission in the USA, which collected money for its working abroad through the​​ Indian Christian Crusade. On returning to India, the appellant was propagating the ideals of the Indian Christian Crusade and was engaged in a movement for the spread of religion and for fighting the forces of atheism. Later, in 1959, he started publishing​​ a daily newspaper in Malayalam called "Kerala Dhwani". During the accounting periods relevant to the assessment years 1960-61 and 1961-62, the appellant received sums of Rs. 2,90,220 and Rs. 3,63,750 respectively as donations through the Indian Christian​​ Crusade from his friends in USA who believed in the cause which he sponsored and for helping the movement. Held in [1985] 156 ITR 0412A ​​ George Thomas (K.) (Dr.) vs. CIT (Supreme Court of India) that the appellant carried on a vocation of practicing against atheism and in the course of such vocation and for the purpose of the same, he received the amounts in question as donations for the furtherance of the objects of his vocation. There was a link between the activities of the appellant and the payments received by him and the link was close enough. The receipts arose to the appellant from the carrying on of his vocation and they were not casual and non-recurring receipts and were taxable. ​​ Once a receipt is found to be of a revenue character, that it comes​​ under an exemption is for the assessee to establish.​​ 

Distinction between Business, Profession is of no Importance.​​ 

Distinction between business, pro­fession and vocation is of no importance in the computation of taxable income. What does not amount to "profession" may amount to "business", and what does not amount to "business" may amount to vocation. The Act treats them on an equal footing and the charging provisions for computing taxable income are the same for all of them.

Vocational income from vedanta teachings

In Swami Premananda v. CIT [2009] 180 Taxman 368 (Mad.), the assessee was running an ashram and reportedly giving Vedanta teachings. During a search operation, he was found to be in possession of several assets and bank accounts which he narrated as acquired out of donations received from his disciples’ majorly foreign nationals.​​ From a letter given by one of the donors, the Assessing Officer held that it was given to the assessee in his individual capacity for his Vedanta teachings. In the consequence he held that amounts received by assessee constituted his ‘income’ and were assessable as profits and gains arising out of his vocation.​​ This decision can lend trouble for several gurus and, swamis that we witness in religious television channels​​ these days who receive devotees in abundance and perhaps large sums as donations too.