1. This is a reference made under Section 162 of the U. P. Municipalities Act by the District Magistrate, Sitapur, for the decision of two questions in connection with the assessment of the tax on trades, callings and vocations on the appellant Shambhu Nath Tandon, who is the stenographer of the District Judge of that place and receives a salary of Rs. 115/- and a clearness allowance of Rs. 30/- per month. Under the provisions of Section 128 (iii) of the Act a Municipal Board can impose a tax on trades, callings and vocations, including all employments remunerated by salary or fees.
The appellant is paying Rs. 25/- per month in the General Provident Fund, a sum of Rs. 7/-in the Contributory Provident Fund and a further sum of Rs. 4/8/- as premium for life insurance to the National Insurance Company, The questions that have been referred to us, are firstly, whether the amount of Rs. 30/- per month which the appellant is receiving as dearness allowance should be included in his income for the purpose of the assessment of the above-mentioned tax; and secondly, whether the amount which he pays towards General Provident Fund and the Contributory Provident Fund and to the National Insurance Company should be deducted from the sum of Rs. 115/- for determining his income. Notification No. 2-193/1 XXIII/57(47-48) published in the U. P. Gazette dated April 30, 1949, runs as follows : --
'It is hereby notified under Section 135 (2) of the United Provinces Municipalities Act. 1916, that the Municipal Board of Sitapur in exercise of the powers conferred by Section 128 (1) (iii) of the said Act, has imposed with effect from May 1, 1949, a tax on inhabitancy, (sic) of the Sitapur Municipality at the following rates :
On Income from Rs. 301 to Rs 600 at
per cent. per annum.
On income from Rs. 601 to Rs 999 at
On Income from Rs 1,000 & aboveat
Subject to a maximum of Rs. 50.
Note (1) Income means incomeearned or arising within the Municipality.
Note (2)Property assessed to house tax under S 128(1) (i) ofthe said Act snail be exempt from the tax.
In the same issue of the Gazette are published the Rules for the assessment and collection of the tax on trades, vocations and callings in the Municipality of Sitapur. On behalf of the Municipal Board it is contended that in the notification mentioned above the word used is 'income'' and not 'salary' and the dearness allowance paid to the appellant will be included in the expression 'income'.
The submission is that all that Clause (iii) of Rule 128 provides is that even employments, remunerated by salary will be included in the expression 'trades, callings and vocations' and there is nothing either in the notification or Section 128 of the Municipalities Act which provides that while computing the income of the appellant his dearness allowance should be excluded and the assessment should be made only on the net salary.
It is true that dearness allowance is not salary. It is also true that the amount paid as dearness allowance will not be classed as salary while computing the pension of the assessee. Payments by way of dearness allowance are temporary in their nature and no sooner the cost of living would fall they are liable to be stopped. It is also true that no person has a right to dearness allowance, but it cannot also be denied that it is nonetheless an income. The word 'income' has not been defined in the Municipalities Act or in the Rules. In the Oxford English Dictionary its meanings are as follows : --
'....... That which conies in as theperiodical produce of one's work, business, lands, or investments (commonly expressed in terms of money); annual or periodical receipts accruing to a person or corporation; revenue ......'
Neither in the Municipalities Act nor in the Rules framed by the Sitapur Municipality there is any provision which may support the contention of the learned counsel for the assessee that dearness allowance should not be considered to be a part of the income of the assessee. As there is no decided case on the point this reference has got to be decided on first impressions only and it appears to us that the dearness allowance cannot be excluded while computing the income of the assessee for the purposes of the assessment of the tax.
It has been strenuously contended by the learned counsel for the assessee that under Clause (iii) of Section 128 of the Act the words used are 'including all employments remunerated by salary or fees' and inasmuch as dearness allowance is neither salary nor fees it is not liable to be included in income for the purposes of the assessment of the tax. We find it difficult to accept this argument because Clause (iii) of Section 128 of the Act does not provide that no amount except salary or fees can be taxed.
All that it provides for is that even employments which are remunerated by salary or fees will be included in the terms 'trade, callings and vocations' mentioned in Clause (iii) of Section 128 of the Act. The idea was to include such employments also as the services or professional callings like that of a lawyer or a doctor. Considering all the circumstances of the case we are of the opinion that the first question should be answered by saying that the sum of Rs. 30/- which the assessee is receiving as dearness allowance must be included while computing his income for the purposes of the tax.
2. As regards the second question, there is no provision either in the Municipalities Act or the Rules which justifies exclusion of the amounts paid either by way of provident fund or as premium to the Life Insurance Company. It is true that in an assessment under the Indian Income-tax Act the assessee is entitled to rebate in respect of payments made towards provident fund or as premia up to a certain amount which varies with the income ofthe assessee but that is because there are provisionsto that effect in the Income-tax Act.
We have already said above that there are no provisions either in the Municipalities Act or the Rules framed by the Sitapur Municipality which would justify the exclusion of the amounts paid as provident fund or as premiums, while computing the income of the assessee. Even under the provisions of the Indian Income-tax Act the amounts paid under these heads by an assessee are not excluded while computing his income for assessment. He only gets a rebate up to a certain amount.
Under these circumstances it appears to us that while computing the assessable income the amount paid by the assessee towards the provident fund either general or contributory or the premium paid to the Life Insurance Company cannot be excluded. It is true that the view we have taken may cause a little hardship, but considerations of hardship cannot prevail over the express language of the Act or the Rules. We, therefore, answer the second question by saying that the amounts paid by the, assessee towards the general provident fund and the contributory provident fund as also as premium to the National Insurance Company cannot be deducted from the income of the assessee while computing his assessable income.