The judgment establishes that income of a professional person, such as a film actress, may be treated under Section 10 of the Income-tax Act if the employment is temporary and incidental to the profession, and the person does not exchange the profession for service.

Headnote:
Income Tax - Film Actress - Income computed under Section 10
Fact of the Case:

The assessee, a well-known film actress, entered into contracts with film companies for acting services at a fixed remuneration. The Department contended that her income represented 'salaries' and should be shown under Section 7, while the assessee argued that her income arose from the practice of her profession as a film actress and should be shown under Section 10. The Tribunal upheld the assessee's contention.
Finding of the Court:

The court held that the assessee's income must be computed under Section 10 and not under Section 7 of the Income-tax Act.
Issues: The main issue was whether the income of the film actress should be treated as 'salaries' under Section 7 or as arising from the practice of her profession under Section 10.
Ratio Decidendi: The court emphasized that the mere establishment of a master-servant relationship is not sufficient when dealing with a person practicing a profession. It was established that the actress did not exchange her profession for service and her employment was temporary and incidental to her profession.
Final Decision: The court answered the reference by stating that the assessee's income falls under Section 10 of the Income-tax Act, and the second and third questions did not arise.

JUDGMENT - Chagla, C.J.

1. The only question that arises on this reference is whether the assessees 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. Joshis 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 actors or actresss 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 suggest

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