1. The question in this case is what is the true construction of Sub-section 3 of Section 31 of the Income-tax Act of 1886 which was added to that section by Act V of 1916. The plaintiff entered into an agreement for a composition of the tax payable by him prior to the amendment of the section and maintains that the agreement is still subsisting, at least to some extent, and that he is not liable to a re-assessment of his income.
2. It has been argued that the amount of tax entered in the agreement was determined with regard to the vicissitudes of plaintiff's trade, which might yield less profits in one year than in another and that hardship is caused by exacting the tax for only a portion of the term fixed by the agreement, which itself provides for a change of rate of tax, and that it must have been intended by the legislature only to alter the rate of tax and not to disturb the basis of the agreement, or in other words, not to require a re-assessment of income. As pointed out by the learned Advocate General the change made by the Act of 1916 is not only of the rate of tax but the new schedules prescribe new scales of taxation, so that the effect of the construction contended for would be to render the new scales inapplicable. The sub-section provides that 'any agreement...shall be determined...by any change...in the rates at which the tax is assessable' and the ordinary legal meaning of the word 'determined' is, 'put an end to.' If the argument of the learned vakil for the plaintiff were adopted the word 'determined' must be read as 'modified' varied, or 'limited', and I do not think that any reason has been shown for adopting such a construction,
3. The object of the agreement of compromise is to avoid reassessment in each year of the term mentioned in it and the tax is thus fixed for future years as well as the year in which the agreement is made and the agreement ascertains the tax payable in each year and fixes the date of payment. The tax therefore 'becomes due' under the agreement on a certain date.
4. The Act of 1916 came into force on the 1st of April 1916 and the effect of the sub-section is that a subsisting agreement is put an end to on that date, and any future agreement is put an end to when any further change of the date of tax is made; but the words 'as regards any tax not already due thereunder ' i.e. under the agreement, limit the operation of the section to sums which have not become actually payable, so that the agreement still subsists as to sums which have become payable, but have not been actually paid at the date of the change of rate.
5. By this construction all the words of the section are given full effect, and the fact that hardship may be caused to the plaintiff is no reason for adopting a forced construction. I answer the 5th issue in the affirmative. On this ruling it is unnecessary to consider the other issues in the case. The suit must be dismissed with costs.
6. By agreement of the parties suits Nos. 326, 334 and 338 of 1917 are decided in accordance with this judgment and they are also dismissed with costs.