1. The question raised in this petition under Section 25, Provincial Small Cause Courts Act is whether that part of the income of banking company which has been derived from investments can be assessed to profession tax by a municipality under Section 93 and the relevant rules in Schedule 4, District Municipalities Act. The facts in so far as they are necessary are that the Kumbakonam Bank, Ltd., was assessed to and paid profession tax for the two half-years of 1910-1941 at the rate of Rs. 68-12-0 half-yearly. Some months later, a notice was issued under Rule 4 (1) of Schedule 4 of the Act, calling upon the bank to show cause against a proposed increase in the assessment because the income from property and investments had not been included in the assessment. The objections were overruled and after the assessment had been enhanced, the additional tax levied was paid under protest. The suit was then launched in order to recover the amount involved. Several pleas were raised but the only question which now arises for decision is whether this income from investments is subject to assessment. On this question there is very little room for doubt. The assessment is made on the basis of a return called for under Rule 19 (1) of Schedule 4, according to which the return must exhibit the income on the basis of which according to the company, it is liable to be assessed to profession tax for the half-year in question. The learned Government Pleader contends that although this rule does not prescribe the various kinds of income which must be exhibited in its return, it necessarily follows from a consideration of Section 277F, Companies Act, and the explanation to Rule 19 of Schedule 4, District Municipalities Act, that the income exhibited must be the total income from all the company's activities as such. Section 277F, Companies Act, defines a banking company in these words:
A 'banking company' means a company which carries on as its principal business the accepting of deposits of money on current account or otherwise, subject to withdrawal by cheque, draft or order notwithstanding that it engages in addition in any one or more of the following forms of business, namely:..the acquiring, holding,... of stock, funds, shares, debentures stock, bonds, obligations, securities and investments of all kinds;....
(17) doing all such other things as are incidental or conducive to the promotion or advancement of the business of the company.
Under these two sub-clauses the investment of the bank's moneys in securities is within its powers as a banking company and there is no room for the contention that the interest received on these investments made within its powers is not part of its income as a banking company. As an alternative to submitting of return under Rule 19 (1) of Schedule 4, District Municipalities Act, the company may submit under the explanation to Clause (2) of Rule 19 the notice of demand of income-tax served upon it; if this be done, the executive authority shall be bound to take one-half of the income mentioned in the demand as the income derived from the sources on which profession tax is leviable under the Act for the half-year in question. Under the Income-tax Act the income from the company's investments would be chargeable, so that this income would be included in the assessment by the executive authority for purposes of profession tax. Apart from this, the learned Government Pleader rightly points out that there is in principle no difference between income which is derived from loans made by a banking company to its constituents, and the interest on loans made to Government in the form of Government promissory notes, etc. The view taken by the learned munsif is incorrect and I find that the income from investments is liable to profession tax. On this finding the suit should be dismissed but the procedure of the municipal council in re-assessing the plaintiff-company appears to have been beyond its powers. As already explained, the council issued a notice under Rule 4 (1), Schedule 4, District Municipalities Act. Rule 4 (1) is in these words:
If at any time it appears to the council that any person or property had been inadequately assessed or inadvertently or improperly omitted from the assessment books relating to any tax, or that there is any clerical or arithmetical error in the said books, it may direct the executive authority to amend the said books, in such manner as it deems just or necessary.
In this rule there is no reference to a company and in view of the fact that Rules 16, 17, 18 and 19 specifically mention companies and persons, the omission must mean that the power to revise the assessment books can be exercised only in respect of persons or property. The learned Government Pleader contends that the word 'property' in this rule must be deemed to include income which has hitherto escaped assessment; but as Rules 1 to 5 of the schedule are common to taxes in general, including the property tax, it necessarily follows that the word 'property' in Rule 4 (1) refers only to immovable property as contemplated by Section 81 of the Act. It is an elementary proposition of law that all taxing statutes must be strictly construed and there is no difficulty in finding on the unambiguous wording of this rule that the power of revision does not extend to a company. Therefore, the proceedings of the municipal council in amending the assessment books and enhancing the tax were beyond their powers and the plaintiff bank was entitled to recover although on a different ground from that on which it has succeeded.
2. Another aspect of the matter which has not hitherto received notice is the irregular way in which this amended assessment was made. The whole of the record has not been printed, but from the papers available it appears that on receiving the auditor's objection to the assessment the matter was placed before the municipal tax appellate committee for the revision of the tax. This procedure is not contemplated by the rules in Schedule 4. Under Rules 19 (2), (3) and (4) the powers of assessment are in each ease to be exercised by the executive authority and the powers of amendment of the assessment books under Rule 4 (1) are also vested in the executive authority. The power to revise the assessment consequent upon the amendment of the assessment books under Rule 4 (1) is to be found in the proviso to Rule 28 of the schedule and it is in these words:
Provided that where any assessment or demand is not in accordance with the assessment books nothing in this rule shall be deemed to prohibit a fresh assessment or demand of the tax being made in accordance therewith.
3. It necessarily follows that if a fresh assessment or demand is to be made, it must be made in accordance with the rules, that is to say, by the executive authority in accordance with the procedure laid down in Rules 16 to 19 of the schedule. When an assessment has been made by the executive authority, it is subject to appeal to the municipal council and these appellate powers are exercised by an appeal committee. Therefore, when the assessment was revised by the appellate committee instead of by the executive authority in accordance with the statutory rules, the plaintiff bank was to all intents and purposes deprived of its statutory right to appeal, apart from the fact that the assessment was made by a body which did not possess the necessary powers. The result must be that although the income from investments is found to be liable to assessment to profession tax, no interference in revision will be made in view of the fact that the plaintiff bank would on other substantial grounds be entitled to relief. The petition is ordered to be dismissed but, in view of the circumstances and the fact that these grounds were not taken in the lower Court, with no orders as to costs.