LexCOMMISSIONER OF EXPENDITURE TAX, ANDHRA PRADESH versus SHRI PVG RAJU, RAJAH OF VIZIANAGARAM
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1017 A COMMISSIONER OF EXPENDITURE TAX, ANDHRA PRADESH f v. B c f D E F G H SHRI PVG RAJU, RAJAH OF VIZIANAGARAM September 29, 1975 LV. R. KRISHNA lYER AND A. C. GUPTA, JJ.] Expenditure Tax Act. (29 of 1957), s. 5 (a) and (j) - Politics if a pro- fessio1~ - Gratuitous paynz.ents towards election expenses of party c<indidates. and td office bearers ~ If 'donation'. Under s. 5 (a) and (j) of the Expenditure Tax Act, 1957. no expenditure tax shall be payable on any expenditure incurred by the assessee wholly and txclu-· sively for the purpose of his business. profession or vocation, and on any expendi-· ture incurred by the a9S'essee by way of donation. The respondent-assessee was the Chairman of the State socialist Party and politics was his profession or occupation. He, is a wealthy socialist and spent Rs. 38,832/- towards election expenses of other candidates of his party, and gave Rs. 47,867 / .. to the office-bearers of his party to meet the expenses involved. in party work. HELD: The two amounts are eligible 'for exclusion from expenditure tax. [1021 BJ. (1) Under modern conditions, politics is a profession or occupation. [1020 q (2) But the expenses incurred on behalf of other candidates cannot be the assessee's professional expenses. [1020 D] · (3) The amounts, however, fall under s. S(j) of the Act. When a pe.rson gives. money to an_other without any_ material return, he donates that sum. Therefore, when the assessee gave money to the candidates of his party for their elections exoe-nses, it was money gratuitously given, that is· he made donations. [1020 E-G] ( 4) Similarly, tile amo.unts paid to office-bearers of the party were not for any material return. They were for loyalty or gratitude. Wholly motiveless donation is rare but 1naterial return alone negates a gift or donation. Therefore, they also were outright gifts. [1021A-<CJ CIVIL APPELLATE JURISDICTION: Civil Apeal No. 30 of 1971. Appeal by special leave from the judgment and order dated the 19th February, 1970 of the Andhra Pradesh High Court in case Reference No. 2 of 1967. R. M. Mehta and S. P. Nayar for the appellant. P. Ram Reddy and A. V. V. Nair for the respondent. The Judgment of the Court was delivered by KRISHNA IYER, J. Keynote though. Politics and philanthropy may well fall victims to the contruction. of s. 5(a) and (j) of the Expenditure. Tax Act, 1957 (the Act for 1018 SUPREME COURT REPORTS [1976] 1 s.c.R. :short) if we fall victim to the submission naively made, at the first stage, by counsel for the State. In fairness to him, we must state that later he retracted from that position, and rightly so, for the Act, in spirit and letter, does not intend this blow on the profession of politics or the ·disposition for donations. A fair reading of the provisions in question convincingly excludes from 'taxable expenditure' sums wholly and exclusively incurred for the purpose of a profession or occupation carried on by the· assessee and no modem man may dispute that politics is a profession or occupation. Likewise, expenditure by way of gift or donation in- i:Urred by the assessec is also excluded and no politically conscious soul will deny that donation to the party in a democracy squarely comes within this exclusionary provision. The factual l!J.lllrix Expenditure tax under the Act was sought to be levied from the :assessee PV,G Raju, the respondent before us. Paradoxical, perhaps, it may appear-but here is a case of a rich Maharaja practising the . politics of socialism, spending lavishly for furthering his party's popularity and the prospects of his fellow candidates at the elections to the Andhra Pradesh Legislative Assembly. This expenditure, falling under two heads, wasl taxed by the ass~sing authority and upheld up to the Tribunal level. The Hi_gh Court, on reference, reversed the findings on both counts and the Commissioner of Expenditure Tax, 1he appellant,, challenges the legality of this verdict. The best beginning in stating the facts may well be to extract :the questions of law referred by the Tribunal in its own words : " ( 1) Whether on the facts and in the circumstances of the case the expenditure of Rs. 38,832/- claimed to be the amount incurred by the assessee for the benefit of other candidates for election is excludible from the taxable cxpentliturc either under Section 5(a) or under Section 5(j) of the Expenditure Tax Act
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