Panchapakesa Ayyar, J.:-This is a case referred to us under section 66 (1)of the Indian Income-Tax Act, 1922, by a Bench of the Income-Tax Appellate Tribunal, Madras Bench. At the instance of the Commissioner of Income-Tax, the Tribunal has referred to this Court for decision the following question:

“Whether on the facts and circumstances of the case set out above, the sum of Rs. 3,000 received by the respondent as remuneration for acting as an arbitrator under section 234 of the Madras Local Boards Act of 1920 was a receipt exempt from assessment under section 4(3)(vii) of the Indian Income-Tax Act?.”

The undisputed facts are briefly these: The assessee, Mr. V.P. Rao, was a member of the Indian Civil Service and a Judge of the Madras High Court before he retired from service in June, 1941. He was also a Barrister but never practised at the Bar. After retirement he had also no whole time profession, vocation or occupation. When he was leading the life of a pensioner, in September, 1941, some three and a half months after his retirement, the Madras Government asked him whether he would find it convenient to serve as an arbitrator for enquiring and reporting about a dispute which had a

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