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. 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. The Cordial Bail Press, Mangalore ILR (1903) M 547 : 1903 14 M.L.J. 410, 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. Sullivan (1881) L.R. 6 A C 373 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.
4. After adverting to various provisions of the Act their Lordships observe that
there is nothing in 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.
In that case a banking concern was assessed to profession tax on the gross income. The learned Judges who decided Municipal Council of Mangalore v. The Cordial Bail Press, Mangalore ILR (1903) M 547 : 14 M.L.J. 410 observe at page 550:
We find nothing in the context in the schedule A (to the District Municipalities Act), or in any other part of the Act, which would lead to the conclusion that the word 'income' is there used in the ' more' onerous sense' as contended for on behalf of the Municipality or otherwise than in its 'natural and commonly accepetd sense' as denoting the profits or not income derived from the business.
There is no other case on the point. Mr. Krishnaswami Aiyar relies upon a recent decision of this Court in C. R. P. No. 294 of 1925, in support of the contention that unless there was in the decision of the Board anything contrary to natural justice or a violation of the rules which are to govern its procedure, a Civil Court has no jurisdiction to question the order of the Board. In that case Odgers and Jackson, JJ., held that the Board did not contravene any of the provisions of the Act or the rules under which the Board had to act. Here the question is not whether the Board contravened any of the provisions of the Act but whether their basis of taxation is correct or not correct. Where the basis of taxation itself is challenged I think the Civil Court has power to consider whether the basis relied upon by the Board is the correct one or not. The question of jurisdiction was raised in Municipal Council of Mangalore v. The Cordial Bail Press, Mangalore ILR (1903) M 547 : 1903 14 M.L.J 410 and reliance was placed upon Section 262, Sub-section 2 of the District Municipalities Act. It was held the Civil Court had jurisdiction to try the suit. The corresponding provision in this Act is Section 228 which is as follows:
No suit shall be brought in any court to recover an)' sum of money collected under the authority of this Act, or to recover damages on account of any assessment or collection of money made under the said authority provided that the provisions of this Act have been in substance and effect complied with.
5. It cannot be said that the provisions of the Act have been complied with when the word 'income' is treated as meaning gross income and not net income. As I said when the basis of assessment is in question, the Civil Court can entertain a suit for setting aside the assessment on the ground that the basis of assessment itself is wrong and Section 228 (2) does not bar such a suit. Section 93 of the present Act is almost word for word for Section 93 of the District Municipalities Act of 1920, and the provisions of that section are the same as the provisions in the District Municipalities Act of 1884 with regard to profession tax. I therefore hold that the word 'income' in Section 93 of the Local Boards Act is net income and not gross income.
6. The question as to whether the case should be sent down or not will be considered after Mr. Krishnaswami Aiyar ascertains from the Board whether the Board will reconsider its decision in view of the decision of this Court. If the Board would agree to revise the assessment, in the light of my decision, it would not be necessary to send the case back to the District Munsif for trial.
7. The question of costs will be considered later on.
8. Adjourned for two weeks.
9. This petition coming on again for further hearing, the Court delivered the following