[1] This is a case referred to us for decision by the Chief judge of the Court of Small Causes under Rule 17 of Schedule IV of Madras City Municipal Act (IV of 1919). The Vulcan Insurance Company was assessed to a licence fee under Section 110. The contention of the Corporation is, that the Company is liable to pay Rs. 500 under the scale prescribed on the capital basis; the latter asserts, on the contrary, that it is to be assessed on the basis of gross income and is liable to pay only Rs.

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5. The material part of Section 110 reads thus:

Every incorporated company transacting business within the city for profit or as a benefit society shall pay by way of licence fee in addition to any other licence fee that may be leviable under this Act a half-yearly tax on its paid-up capital on the scale shown in the taxation rules in Schedule IV but in no case exceeding rupees one thousand, if and as soon as it has transacted business in the city for the period, prescribed in Section 113."

Explanation-.--Whenever a company has an office, agent or firm to represent it for the purpose of transacting business in the city, such company shall be deemed to transact business in the city and such office, agent or firm shall be liable for the tax in respect of the company s business, whether or not such office, agent or firm has power to make binding contracts on behalf of the company.

[2] Rule 7, Schedule IV provides:

Companies shall be assessed by the Commissioner on the following scale:

Provided that any company, the head office or a branch or principal office of which is not in the city and which shows that its gross income received in or from the city has not in the year immediately preceding the year of taxation exceeded-

[3] The Company contends that the case falls within the proviso referred to above. The question is, does it or does it not apply The learned Chief judge has decided the point in favour of the Corporation of Madras.

[4] The Company has a paid-up capital of about 15 lakhs of rupees. In the second half-year of 1925-26, it, for the first "time, began to transact business in the city through a local agent without having at Madias "the Head Office or a branch or principal office". What is the proper amount which the Company is liable to pay at its very first assessment under the Act Two conditions must be satisfied under the proviso. The first requirement is fulfilled, as it transacted business in the year of assessment, only through a local agent. Then, is the second condition satisfied or not The proviso speaks of two years, the year of taxation and the year preceding it. This Company started business for the first time in the year of taxation. It says it received no income from the City in the year preceding it and on that ground claims the benefit of the proviso. In my opinion its contention is well founded.

[5] According to the learned Judge it is incumbent on the Company to show that if actually did business in the City in the preceding year. But to this effect there are no words in the proviso and why should they be imported into it Mr. Raja-manickam very strongly urges that the right construction is that adopted by the learned Judge. He asks us to read into the proviso certain words occurring in Section 110 of the Act, in other words, to amplify the expression "any company" by reading it as "any company transacting business within the city". So far, he is perfectly right. Supposing these words are added, what follows The reference to the transacting of the business is to the year of taxation and not the preceding year. Mr. Rajamanickam s contention cannot prevail if we add in the proviso merely the words to which I have referred. Much more has to be done. We must introduce another set of words, namely, "from business transacted in the city" after the phrase "from the city". How can such a course be possibly justified Let us suppose that the Company did transact business in the City in the preceding year but that its income was nil , does the proviso apply or not Mr. Rajamanickam concedes that it does. That also seems to be the view of the learned Judge. The distinction, according to them, is not between no income and some income, but the decisive test is, whether the Company transacted or not its business in the City. The argument on behalf of the Corporation ignores also the distinction between the two words "in" and "from" in the proviso. Granting that the expression "income received from the city" applies only to the transacting of some business, the word "in" cannot have the same significance. Moreover, income is not confined to receipts from business only. As pointed out in Secretary to the Board of Revenue v. Arunachalam Chettiar (1920) I.L.R. 44 M. 65 : 39 M. L.J. 649 (F.B.) "income" is described in-the Oxford Dictionary as "periodical receipts from one s work, lands, investments, etc." I find no difficulty therefore in construing the proviso in favour of the Company. But granting that the words are ambiguous, the true canon of construction is the following:

If it be doubtful or difficult of interpretation, which I do not think it is, the Finance Act is subject to the rule that no tax can be imposed except by words which are clear, and the benefit of the doubt is the right of the subject."--Per Fitzgibbon, L.J., in In re Finance Act, 1894, and Student, (1900) 2 Irish Reports, p. 400 at 410.

[6] To the same effect is the following passage from Halsbury, Vol. 27, p. 180, para. 345:

If the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however much within the spirit of the law the case might otherwise appear to be. There can be no equitable construction admissible in a taxing statute.

[7] The construction of the Company is, in my opinion, well founded and I answer the reference accordingly.

Madhavan Nair, J.

[8] It appears to me that the respondent s contention that the "proviso" does not apply to the assessee in this case is not without force. But on the face of it the language of the proviso is also open to the construction sought to be put upon it by the appellant. As the proviso is very ambiguously worded, I think that, following the time-honoured rule, the benefit of the doubt should be given to the assesses in this case. I, therefore, agree with the order made by my learned brother.