RS AR AR ARUNACHALLAM CHETTIAR BY AGENT, VALLIAPPA CHETTIAR Vs. NAMAKKAL UNION BOARD (SALEM DISTRICT) BY ITS PRESIDENT SSABJAN SAIB

JUDGEMENT

(1.) This is an application to revise the decree of the District Munsif of Namakkal dismissing the suit of the plaintiff for a refund of a portion of the profession tax paid by him to the Union Board of Namakkal. The plaintiff's case is that he, a money lender, was assessed on the gross income for the year and that he is liable to pay profession tax only on the net income and that he is entitled to be paid back the amount which was collected in excess of the amount which he was liable in law to pay. The Union Board raised several pleas to the suit One of which was as regards the jurisdiction of the court to entertain such a suit and the second was that the defendant was justified in taking the gross income as the basis for assessing profession tax. The District Munsif held that under the Local Boards Act the gross income was the basis of taxation and that the court had therefore no jurisdiction to entertain the suit.

(2.) The main contention of Mr. Seshagiri Sastri for the petitioner is that the expression "professional income" in Section 93 of the Local Boards Act means only the net income and not the gross income of the petitioner. The petitioner is a money lender who carries on money lending business not only with his own money but with borrowed capital and the net income therefore would be the gross income minus the charges incurred in carrying-on the business and the interest that he has to pay on the borrowed capital. The word income is not defined in the Act. In Section 93 the expression used is "professional income." In assessing a person to profession tax the President of the Board is given the power under Schedule 4, Rule 9, of classifying the persons liable to profession tax and in the classification the income is taken as the basis. Class 1 consists of persons whose income is not less than Rs. 2,000 per mensem and there is gradation of the classification going down to not less than Rs. 25 per mensem. This classification shows that a person is to be assessed on the income actually earned by him. It is suggested by Mr. T. M. Krishnaswami Aiyar that the profession tax is levied for the purpose of carrying on the profession and therefore a person who carries on a profession is bound to pay the tax. But this argument overlooks the fact that profession tax is not levied on the basis of the income derived by a person from the profession. When income is the basis of taxation, what actually benefits the person can be called income, and not everything that comes into the business but what accrues to his benefit, that is to say, the gross income, minus the legitimate charges, would be the income of the person. It has also to be noted that in the case of companies, in Rule 8 the expression " gross income " is used. When the legislature uses the expression "gross income " in one rule and uses the word income in another rule, the court construing the Act must give the expressions the meanings which they are intended to convey in the context. I am unable to accept the contention of Mr. Krishnaswami Ayyar that the word income as used in the Act could only mean gross income. If that was so, then I fail to see why in Rule 8 the word gross should have been used in front of the word income . This shows that the legislature made a distinction between gross income and income as such and as I have observed income could only mean in the ordinary sense, income which really benefits a person and not the gross earnings or gross takings of which only a fraction may really benefit a person. Even if there were no authorities I should be inclined to hold that the word income as used in the Local Boards Act could only mean net income for the purposes of taxation under Rule 9.

(3.) The question as to the meaning of the word income arose so far back as 1900 in a case Subramaniam V/s. The President, Municipal Commission, Madras (1913) M.W.N. 935, stated by the Presidency Magistrate for the opinion of the High Court. Shephard and Boddam, JJ., held that they were of opinion that it was the net income which should be considered. No reasons are given for the opinion although it appears from the report that the point was argued by very able counsel. But in a later judgment of this Court reported in Municipal Council of Mangalore V/s. The Cordial Bail Press, Mangalore (1903) I.L.R. 27 M 547 : 14 M.L.J. 410 (P.C.), this point was fully discussed. There the question was as to the meaning of the word income used in Schedule A of the District Municipalities Act of 1884. Sir Subramania Aiyar, O. C. J., and Bhashyam Aiyangar, J., held that the word income meant net income. They relied upon Lawless V/s. Sullivan (1881) L.R. 6 A C 373, at P. 375 (P.C) for their view that income meant net income. The Privy Council in that case observed; The question is whether the word "income" in the enactment to be construed is to be understood in a different and what, for the purpose of taxation would be a more onerous sense.