KEKHUSHRU EDULJI Vs. JINABHAI JIWANJI

JUDGEMENT

(1.) This is a reference made by the First Class Subordinate Judge of Surat under Order XLVI, Rule 1, of the Civil Procedure Code, and arises out of an appeal pending before him under Section 9 of the Bombay Agricultural Debtors Relief Act. In the-statement of facts of the case drawn up by him he has said, that he entertains a doubt about the correct interpretation of the word "income" in the definition of the word "debtor" in Section 2, Sub-section (6)(a)(iv), of that Act, but he has expressed no opinion of his own as required by Order XLVI, Rule 1, of the Civil P. C.. The appellant, claiming to be a debtor, made an application to the Debt Adjustment Board at Bulsar Under Section 17, Sub-section (1), of the Bombay Agricultural Debtors Relief Act, for the adjustment of his debts. The Board held that he was not a debtor since his annual income from sources other than agriculture exceeded Rs. 300. "Debtor" is denned in Section 2(6)(a)(iv) as meaning "an individual (i) who is indebted, (ii) who holds land used for agricultural purposes, (iii) who has been cultivating such land personally from a date prior to April 1, 1937, and (iv) whose annual income from sources, other than agriculture and manual labour does not ordinarily exceed twenty per cent of his total annual income or does not exceed Rs. 300 whichever is greater." In the opinion of the Debt Adjustment Board, the appellant does not fulfil the fourth condition for being a debtor. He has, at present, no land of his own, but has taken on lease twenty-four lands of his brother assessed at Rs. 68-4-0 on a rent of Rs. 300 a year. Out of those lands, he personally cultivates an area of 10 acres and 23 gunthas and has sub-let the rest, He admits that he, gets an income of Rs. 200 from the former and Rs. 460 or Rs.- 570 from the latter. According to Explanation 1 to Section 2, Sub-section (6) of the Bombay Agricultural Debtors Relief Act, "agriculture" does not include leasing of land. Hence income derived by the appellant from the lands leased out to tenants is to be treated as "income from sources other than agriculture and manual labour," and if it exceeds Rs. 300 a year, the appellant will not be deemed to be a debtor as defined in Section 2, sub-s. (6)(a)(iv).

(2.) In appeal it was contended before the learned Subordinate Judge that out of Rs. 460 or Rs. 570 realised by him from the lands sub-let, he had to pay Rs. 300 to his own landlord, and thus his net income was less than Rs. 300 a year. The learned Judge could not make up his mind as to whether the word "income" used in Section 2, Sub-section (6)(a)(iv) meant gross income or net income, and so he has made this reference.

(3.) The word "income" standing by itself, is capable of meaning either gross profit or net profit and has, therefore, to be interpreted with reference to the context. In common parlance, however, income is understood to mean net income. In Lawless V/s. Sullivan (1881) 6 App. Cas. 373 the Privy Council had to interpret the word "income" for the purpose of taxation, and their Lordships said (p. 384): ...there is nothing it the enactment imposing the tax, nor in the context, which should induce them to construe the word income when applied to the income of a commercial business for a year, otherwise than in its natural and commonly accepted sense as the balance of gain over loss . This interpretation was adopted by the Madras High Court in Municipal Council of Mangalore V/s. The Codial Bail Press (1903) I.L.R. 27 Mad. 547 and in Arunachallam V/s. Namakkal Union Board [1928] A.I.R. Mad. 346. In Russell V/s. Town and County Bank (1888) 13 App. Cas. 418, Lord Herschell observed (p. 424): The profit of a trade or business is the surplus by which the receipts from the trade or business exceed the expenditure necessary for the purpose of earning those receipts. That seems to me to be the meaning of the word profits in relation to any trade or business. Unless and until you have ascertained that there is such a balance, nothing exists to which the name profit can properly be applied.