1. These seven appeals depend on the same issues of law and fact. Plaintiffs are the appellants. The I cause of action is that they were assessed to profession-tax in respect of a certain kind of income in the year 1928-1929 by the Taluk Board, Devakottah. The Board is the respondent. The suits were to recover the tax and for a declaration that it was illegally levied and for an injunction restraining the Board from levying it on such income in future. The learned Subordinate Judge, Devakottah, reversing the trial Court's decree dismissed the suits.
2. It is objected by the learned advocate for the respondent that under Section 102 of the Civil Procedure Code, no second appeal lies, since the suits are of a small cause nature, being merely to recover small sums of money. But the suits are, in addition, and perhaps mainly, for an injunction restraining the Board from taxing in future a particular kind of income which according to the appellants is not taxable as professional income under the Local Boards Act. The same point was raised and overruled in S.A. No. 882 of 1928, Chockalingam Chettiar v. Taluk Board, Devakottah (1932) 36 L.W. 659. We overrule it again.
3. Admittedly appellants resided in the area of the Local Board for more than sixty clays in each half year of the year beginning 1st April, 1928 and ending 31st March, 1929. Admittedly they received money by means of remittances from their places of business in Burma where they carried on the trade of money-lending. On these remittances the appellants were assessed to profession-tax under Sections 93 and 96 of the Act then in force, namely, the Madras Local Boards Act (XIV of 1920). They contend that this kind of income is not taxable under that Act and the principal question for decision in these appeals is whether the lower appellate Court was wrong in holding that it was. The question has to be decided on a construction of the taxing sections of the Act.
4. The relevant section is Section 93. It is as follows:
If the President of the District Board publishes a notification under Section 77, that a profession-tax shall be levied in any local area, every person who within such area, and for the period laid down in Section 96, exercises a profession, art, trade or calling; or is in receipt of any income from money-lending or any source other than houses and lands inside the local limits of the area notified under Section 77, bringing him within one or more of the classes specified in Schedule IV, shall pay a half-yearly tax on his professional income, on the scale shown in the said schedule.
5. The case of the appellants is that the money derived from their money-lending business in Burma is income when it accrues in Burma to their agents or partners there but is not income when it, or part of it, is remitted to the appellants in Devakottah. Therefore, they contend, they are not in receipt of any income from money-lending in Devakottah.
6. No authority is cited for this position. -The remittances on which the appellants have been taxed are admittedly derived from their money-lending business in Burma; and the appellants, in the words of Section 93, are 'in receipt' of these remittances when they come into their hands in Devakottah. We think it is plain that these remittances are 'income from money-lending'. We do not think it makes any difference that the profits accruing from the business are actually earned elsewhere and pass first through the hands of some agent or partner before they reach the hands of these appellants.
7. This exact point has already been decided by a Bench of this Court in Cheena Pena Rena Perianan Chetty v. Taluk Board, Devakottah : (1932)63MLJ148 . The facts in that case were exactly the same as in these appeals. We respectfully agree with that decision. The same argument that income cannot be received as income more than once was raised in that case and negatived. On this ground of appeal therefore the appellants must fail.
8. Apart altogether from the fact that appellants are liable as being in receipt of income from money-lending it appears to us that they are liable on another ground. Section 93 embraces three classes of persons: (a) persons who within such area exercises a profession, art, trade or calling; (b) or are in receipt of any income from money-lending; (c) or are in receipt of any income from any source other than lands or houses inside the local limits of the area.
9. Conceding for the sake of argument that in the process of transmission to Devakottah these remittances in some subtle way lose their character of 'income from money-lending' they still continue to be income from a certain definite source, which is not:
lands or houses inside the local limits of the area.' It appears to us therefore that the appellants are persons who are taxable in respect of those remittances on that ground also.
10. Two further objections are raised in these appeals. Both have reference to the method of taxation. The tax is a half-yearly tax. The appellants object that they have not been assessed at all in the first half-year and so are not liable to pay the tax for that half-year; and that they have not been legally assessed in the second half-year. Section 93 after describing the kinds of income which are assessable to the tax, provides that persons in receipt of such income shall pay a half-yearly tax on it on the scale shown in Schedule IV. And Section 9 of Schedule IV is:
Persons liable to the profession-tax shall be classified by the President of the Local Board and assessed to the profession-tax on a scale proceeding proportionately to the following maximum scale, or on the maximum scale as the case may be, and the President may from time to time revise such classification.
11. Then follows the scale. The effect of Sections 93 and 9 of the schedule, therefore is that persons liable to the tax shall pay a half-yearly tax on their professional income on being assessed to the tax in the manner laid down in Schedule IV, that is to say, when the President has decided in which of the classes enumerated in the scale, each person falls. The tax in these appeals relates to two half-years, namely, the half-year ending 30th September, 1928, and the half-year ending 31st March, 1929. The appellants were not assessed by the President for the first of these periods and their contention is that they are not taxable for that period. What happened was that in January, 1929, that is to say, towards the close of the second half-year the President classified the assessees as having been, for the whole year, in receipt of an uniform monthly income of so much per month, and imposed a tax amounting in each case to twice the appropriate half-yearly tax. The appellants contend that this procedure is illegal. Their case is that they must be assessed to the half-yearly tax within the half-year to which the tax relates; in other words that they cannot be assessed retrospectively. We think that this contention must prevail. The point has been decided in Prince of Arcot v. Corporation of Madras (1929) 57 M.L.T. 536 : I.L.R. Mad. 866 on a construction of the provisions of the Madras City Municipal Act (IV of 1919) which in our opinion are similar in principle in this respect to the Madras Local Boards Act (XIV of 1920). That is a very exhaustive judgment and we feel that we cannot add anything useful to the reasoning of the learned Judges Waller and Krishnan Pandalai, JJ., who decided the case. It is contended by the learned Advocate for the respondent Board that Sections 111 and 113 of the Madras City Municipal Act which are the taxing sections of that Act differ from Section 93 of the Local Boards Act in an important particular, namely, that they require a determination of the tax to be made by the, taxing authority before the tax becomes leviable. The relevant words of Section 113 of that Act are:
If, for sixty days in the aggregate in any half-year, any person exercises a profession, etc., rendering him liable to the profession-tax such person shall become liable for the profession-tax and if the tax due in respect of the half-year is not paid, the Commissioner shall cause a notice to be served on such person to pay it within fifteen days.
12. And Section 111 is:,
Every person who within the City and for the period prescribed in Section 113 exercises a profession, etc., bringing him within one or more of the classes of persons specified in the taxation rules in Schedule IV shall pay a tax as determined under the said rules.
13. And Schedule IV is as regards profession-tax:
Persons shall be assessed by the Commissioner to the profession-tax under the following classes on a scale to be determined by the Council from time to time,
14. The argument of the learned Advocate for the respondent Board is that under the Local Boards Act a person becomes liable to pay the tax for any particular half-year by the mere fact of his receiving an income which is taxable under Section 93; while under the Municipal Act a person does not become liable until he is assessed by the Commissioner under the taxation rules. We do not think that this distinction can be made. Under Section 93, liability accrues when a person exercises a profession or receives an income 'bringing him within one or more of the classes of persons specified in Schedule IV'.
15. And turning to Section 9 of Schedule IV we find that he does not come within any of the said classes till he is 'classified' by the President. In other words the President before assessing any one to tax is bound to determine in which class of the schedule he falls, just as the Commissioner under the taxation rules which apply to the city has to do exactly the same thing. In substance we think there is no difference between the two Acts. The concluding words of the substantive portion of Section 93 of the Local Boards Act, namely:
shall pay a half-yearly tax on his professional income on the scale shown in the said Schedule (Schedule IV),
mean by implication that the President has to determine the assessee's place in the scale and in that manner determine the amount of the tax. We observe also that this determination by the President is not final. An assessee is at liberty under Section 11 of the Schedule to have his place in the scale and therefore the amount of his tax revised by the President on producing his accounts and demonstrating that he should be placed lower in the scale.
16. But even if for the sake of argument it is conceded that there is this difference between the two Acts does that prevent the principle of the Prince of Arcot v. Corporation of Madras (1929) 57 M.L.T. 536 : I.L.R. Mad. 866 from applying to the facts of the present cases. The broad facts are that this is a half-yearly tax that it is assessed by the taxing authority at rates proportionate to the monthly income accruing during that half-year, and that it is leviable in the half-year itself. The principle of the case cited is that to allow the tax to be assessed after the close of the half-year is inconsistent with the scheme of the Municipal Act which in these broad aspects, does not differ from the Local Boards Act. Following that decision we must allow these appeals to this extent, namely, that the tax for the first half-year was illegally imposed and is recoverable by the appellants.
17. Lastly it is urged that even in respect of the second half-year the assessment is illegal inasmuch as there is no separate assessment for that half-year. We think that this objection is one of form and not of substance. The order of assessment in each case stated that the assessee received an income of so much per month during the whole year and that he was assessed to a tax which, on reference to the schedule, is seen to be twice the half-yearly tax appropriate to such monthly income. We think that this clearly means that for the second half-year the assessee received a monthly income of the amount stated and was liable to pay a tax amounting to half of the amount at which he was assessed.
18. In the result, we allow these appeals to the extent stated, namely, that the appellants are entitled to recover half of the tax paid by them for the year 1928-1929, representing the tax for the first half of that year. To that extent the decree of the lower appellate Court is modified. For the rest the appeals are dismissed.
19. Appellants to receive half their costs throughout from the Local Board respondent and the latter to pay its own costs throughout.