S. Ramachandra Iyer, C.J.
1. These connected Civil Revision Petitions which relate to the assessment to tax by the Corporation of Madras against the respondent company for six half years raise a common question as to the rate of tax payable. Godrej Soaps (Private) Ltd. is a company registered under the Indian Companies Act whose Head or Principal office is not in the city of Madras. There is, however, a Branch office of the company at Madras. In respect of the business done in Andhra Pradesh and Kerala State all monies come to the Madras office and then they are transmitted to the Head office at Bombay. In the matter of levy of tax on companies, the Corporation of Madras sought to levy the tax on the gross income received by the Madras Branch including therein income derived from the business done in Andhra Pradesh and Kerala State which passed through the Madras Branch office. Reversing the view taken by the Taxation Appeals Committee of the Corporation, the Chief Judge of the Court of Small Causes, Madras held that the respondent can be assessed to companies tax only on the income derived from the business done at Madras and not on the income arising or accruing from business done outside the city of Madras. Under section no of the City Municipal Act, tax is leviable on companies transacting business within the city in any half year for not less than sixty days in the aggregate. The tax under the section would be assessed in accordance with rules in Schedule IV. Section 113 defines expression ' transacts business ' in sections no and 111 by deeming it to include the doing of acts of business of whatever nature, whether isolated or not, such as soliciting, obtaining or transmitting orders, or buying, making, manufacturing, exporting, importing, receiving, transmitting or otherwise dealing with goods.
2. Schedule IV of the Act which contains the rules for assessment to tax provides in Rule 7 for assessment on companies on a graded scale proportionate to their paid up capital. That applies to companies whose Principal or Head office is in the city of Madras. Section no provides that the tax levied will not in any event be higher than Rs. 1,000. The Proviso to Rule 7 relates to cases where the Principal or head office of the company is net situate within the city. That provides for a graded scale of tax in accordance with the grots income ' received in or from the city. ' The only point for consideration in the present case is whether monies received as a result of transactions done outside the city of Madras by the company but in respect of which the gross income came into the city and were in due course transmitted to the Head office at Bombay, would come within the term 'received in or from the city.' In Indian Leaf Tobacco Development Co., Ltd. v. Council of the Corporation of Madras (1954) 1 M.L.J. 176 : I.L.R. (1954) Mad. 417, it was laid down that in order that a company can be said to be entitled to the benefits of the Proviso to Rule 7 of Schedule IV, it must establish two things, namely (1) that its Head or Principal office is not in the city and (2) that its gross income received in or from the city in the relative year has not exceeded a particular sum. In the present case the first condition has been satisfied. The question then is whether the monies received from the Kerala State and Andhra Pradesh could be said to be income received ' in and from ' the city. In Best and Company, Ltd. v. Corporation of Madras : (1924)46MLJ505 , the expression ' gross income received in or from the city ' in the Proviso to Rule 7 of Schedule IV were construed so as not to include income arising out of business transacted outside the city of Madras, albeit the proceeds of such business were transmitted to and received by the agents of the incorporated company at Madras. In that cane the company was incorporated in England. The income was received at Madras where the company had a Branch office in respect of transactions done outside the city and they were regularly transmitted to England. The learned Judges held that under Section 110 it was necessary that the monies should be received as a result of transacting business in the city and that income got from business done outside the city could not be held to be income received in the city. In the present case although the company can in a sense to deemed to carry on business within the city in respect of business in the two States its Head office being outside the city it would be entitled to claim the benefit of the Proviso to Rule 7 of Schedule IV. I am, therefore, of the opinion that the order of the lower Court is correct. These Civil Revision Petitions fail and are dismissed with costs, one set advocate fee.