049-NLR-NLR-V-36-RAJAPAKSE-v.-COMMISSIONER-OF-INCOME-TAX.pdf
258
Rajapakse v. Commissioner of Income Tax.
1934 ^Present: Dalton and Drieberg JJ.
RAJAPAKSE v. COMMISSIONER OF INCOME TAX.
S. C. (50)—Income Tax.
Income Tax—Deduction for expenses incurred—Advocate practising inSupreme Court—Claim for travelling from residence to the Courts—Meaning of the term " place of business ”—Ordinance No. 2 of 1932, s.10 (a).
The expenses incurred by an advocate in travelling, from premisesin which he resides and has his chambers, to the Supreme Court are notcosts of travelling between his residence and place of business within themeaning of section 10 (a) of the Income Tax Ordinance.
T
HIS was a case stated for the opinion of the Supreme Court under theprovisions of section 74 of the Income Tax Ordinance, 1932.
The appellant is an advocate residing at Rosmead place, Colombo, andpractising before the Supreme Court at Hulftsdorp. In returning theprofits from his profession he claimed certain deductions including rentof chambers in his house and the cost of travelling to and from chambersto the Supreme Court, sitting in its appellate capacity at Hulftsdorp. Hewas allowed a deduction in respect of his chambers, but was refused thededuction for the cost of travelling between Kis chambers and the SupremeCourt. The Board of Review held that-the deduction claimed was thecost of travelling between residence and place of business within themeaning of section 10 (a) of the Income Tax Ordinance and could not be- allowed.
Rajapakse v. Commissioner of Income Tax.
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H. V. Perera (with him K. S. Aiyer and M. M. I. Kariapper), forassess ee, appellant.—It is submitted that an advocate’s chambers are hisplace of business. A place of business connotes a fixed place where a feeis charged for the commencement of a duty. A great part of an advocate’swork is done in chambers—consultations, preparation of cases, accept-ance of fees, clerical work through his clerk.
If one considers the case of a proctor, it is hardly possible to say that aproctor comes to the Courts as his place of business. A proctor cannotappear in some Courts, e.g., Appeal Court. A chamber lawyer may cometo the Courts at Hulftsdorp merely to consult authorities which he cannotfind at home. A place of business is rather a place where one enters intoa t-^ntract than a place where one seeks to execute or complete one’sbusiness.
Secondly, the profession of an advocate is neither a business nor anemployment under section 10 (a). In a very broad sense the wordbusiness may be applied to a profession. A business implies somethingcommercial. Business implies advertising, a professional man cannot dothat. Employment presupposes an employer. In an employment wagesare important. An advocate cannot offer his services to the public atlarge. His work is really honorary, for he cannot sue for fees. SeeCommissioner of Inland Revenue v. Maxe1 for the difference betweenbusiness and profession.
J.E. M. Obeyesekere, Acting Deputy S.-G. (with him M. F. S. Pulle,C.C.), for the Income Tax Commissioner.—The finding of the Com-missioner and of the Board of Review that the place where the appellantargues his cases is one of his places of business is a question of fact whichshould not be disturbed.
[Drieberg J.—If it is a finding of fact, why is this case stated ?]
It is a question of law, whether apart from the appellant’s connectionwith them, the Courts at Hulftsdorp are a place of business. (UshersWebster Brewery Ltd. v. Bruce An advocate may have more than oneplace of business. In the ordinary course the appellant comes to Hulfts-dorp and argues his cases. An advocate interviews proctors, acceptsretainers and does other legal work at Hulftsdorp. At stated times theappellant is available to his clients and proctors at Hulftsdorp. Aperson may have more than one place of business. The appellant’sresidence does not cease to be a residence merely because he uses oneroom in that residence as a place of business. When the appellanttravels between Rosmead place, where he has his residence, andHulftsdorp, he travels between his residence and a place of business,within the meaning of section 10 (a).
Business is given a wide meaning in English Income Tax practice. Itdoes not mean a trade only (Smeaton v. Attorney-General *).
Counsel also cited Commissioner of Inland Revenue v. Korean Syndicate4,and Smith v. Anderson
The word business has a wide meaning. We hear of the business ofthe Courts. An advocate’s business is in the Courts.
1 (1919) 1 K. B. 647.3 12 Tax Cases 166. (1920) 1 Ch. 85.
3 (1915) A. C. 433.*■ (1921) 3 K. B. 258.
(1380) 15 Clt. D. 247. 258.
260DALTON J.—Rajapakse v. Commissioner of Income Tax.
H. V. Perera, in reply.—If Courts are a place of business, a fortiori thechambers. The work of an advocate may be looked at from two pointsof view (1) work he has to do from day to day in respect of a number ofcases he has in hand, (2) particular acts of employment.
From the first point of view he begins his work earlier in the day in thechambers and not in the Courts and not at the time work commences inthe Courts. An advocate begins his work for the day in his chambers.From the second point of view the work done in a single act of employ-ment is not only the argument but also the preparation, which is done inchambers. An advocate’s duties in respect of a piece of work commencesin his chambers. When he comes to the Courts he is travelling to a placewhere a part of his duties have to be done. An advocate can practise allover Ceylon, he need not confine himself to one place.
Cur. adv. vult.
November 28, 1934. Dalton J.—
This is a case stated for the opinion of this Court under the provisionsof section 74 of the Income Tax Ordinance, 1932.
The following facts are established or admitted. The appellant is anadvocate residing at Rosmead place, Colombo. He normally attendsthe Supreme Court in Hulftsdorp, Colombo, every day when it is sittingfor the argument of appeals listed for hearing before that Court. He haschambers in his house, in which he interviews proctors and clients, writesopinions, accepts retainers and prepares his cases. He occasionallyappears in the original Courts outside Colombo, on retainers. Thetravelling expenses incurred in going to such outstation Courts have beenallowed.
In returning the profits from his profession he claimed certain deduc-tions including rent of the chambers in his house and the cost of travellingto and from such chambers to the Supreme Court sitting in its AppellateJurisdiction at Hulftsdorp, amounting to Rs. 640 for the Income Taxyear ending March 31, 1933. He was allowed a deduction in respect ofhis chambers, but was refused the deduction for the cost of travellingfrom his chambers to the Supreme Court at Hulftsdorp. The Board ofReview held that the deduction claimed was the cost of travellingbetween residence and place of business or employment, within the termsof section 10 (a) of the Ordinance, and therefore the deduction claimedcould not be allowed.
Two questions arise for decision, the first and principal one beingwhether the Board was correct in holding that the Supreme Court,Hulftsdorp, was the appellant’s place of business or employment, withinthe meaning of section 10 (a). I regret I am unable to agree with theirconclusion on this point.
I am satisfied that it was intended that the sub-section (a) should beread as widely as possible, and for that reason I am unable to agree withMr. Perera’s contention that the profession of an advocate cannot bebrought within the words used there. I have no doubt that the sectionwas intended to, and does apply to professional men such as the appellant,just as to others carrying on their trade, business or employment generally.I agree with him, however, when he urges that the Appellate Courts atHulftsdorp cannot be said to be the appellant’s place of business or
DALTON J.—Rajapakse v. Commissioner ofTax.
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employment, or even a place of business of the appellant, within themeaning of the section, although the Courts are undoubtedly, of course,places to which the appellant resorts in the course of carrying on hisprofession.
The term “ place of business or employment ”, as used in this sub-section, imports, in my opinion, first of all some idea of fixity of place, sofar as the business or employment is concerned, a place where a manwould normally be found regularly or perhaps at stated intervals, for thepurpose of carrying on his work or profession generally. Which of theAppeal Courts is it suggested is the place of business or employment inthis case ? Perhaps that Court in which the appellant’s cases may beheard on any particular day. That Court may vary from day to day, andon some days it may happen that the appellant has no cases down forhearing. In the latter case he would presumably not attend the Courtsat all, but his work would still be going on in his chambers. Can it thenbe said that his place of business is the Appellate Courts as a whole,whether they are sitting or not, and whether he has any cases down forargument or not ? That, I think, is the contention put forward that hasbeen upheld by the Board. Wide though the words of the sub-sectionundoubtedly are, I feel quite unable to give it any such vague and indefiniteconstruction as we are asked to do in this case. The words, to my mind,import also a conception of some personal right to the place as a place ofbusiness or employment, or a duty to be there, based on something verymuch stronger than an advocate’s right of audience in the Courts and hisduty to the Court and to his clients. Advocacy is no doubt an importantpart of the appellant’s work, but there is much of his work that he doesnot do in the Courts at all. The preparation of his cases, the writing ofopinions, acceptance of retainers, conferences, and consultations normallytake place in his chambers, as is admitted in the case stated by the Board,and not elsewhere. That is the place where inquiry would normally bemade for him, where his clerk would be, and the place to which his workor business comes to him. So far as any of the work mentioned is doneat Hulftsdorp, it would, I presume, be done at the Law Library, but inany case probably to a very small extent.
Another difficulty that arises from the argument put forward byMr. Obeyesekere in support of the Board’s decision is as to the extent towhich he would carry it. It is conceded of course that a man may havea place of business, but that there may be no business coming in, andnothing for him to do. In that event it was answered that he would haveno income tax, «£>ut that is not so. A young advocate, looking for work,hoping for briefs, but possibly not very successful for some years, mighthave an income from other sources such as private property belonging tohimself, and any deduction he claims would presumably be a deductionfrom the total income he receives. The argument put before us must,I think, extend to this, that the Courts in question are the place of businessof every advocate practising there or holding himself out as practisingthere, whatever the extent of his work may be.
That all the Courts which the appellant attends are not a place ofbusiness or employment of the appellant, within the meaning of section10 (a), has been recognized by the Board of Review, for they have allowed
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DALTON J.—Rajavak.se v. Commissioner of Income Tax.
a deduction under section 9 (1) of the Ordinance in respect of travellingexpenses incurred by the appellant in going to Courts outside Colombo.I have some difficulty in understanding on what grounds that has beenallowed, if the Courts which he attends are a place of business or employ-ment, within the meaning of section 10 (a). I do not see that the factthat an advocate appears more frequently in one Court than in anothercan have any bearing upon the construction of section 10 (a).
I find practically no .assistance on this question from any of the Englishauthorities cited to us, for the provisions of the law we are asked toconstrue here differ from the equivalent provisions of the Income Taxlaw in England. I would add, however, that I should be very surprisedto hear any barrister practising in London giving his place of business oremployment, using that term as applicable to a professional man, as theRoyal Courts of Justice in the Strand, however large or small the volumeof his work there might be.
If the appellant’s place of business is the Courts which0he attends in thecourse of carrying on his profession, then it might well be said that theplace of business of a medical practitioner, who carries on private practice,is the different houses of his patients which he visits in the course of hismorning or evening round. Another instance in the case of the medicalman would be when he attends patients in a nursing home, which does notbelong to him, and at which he holds, no appointment. If he fairlyregularly attended patients of his at such a nursing home, whenever theywere inmates there, could it possibly be said that such a nursing homewas his place of business ? In my opinion, the most that could be said,so far as the question arising here for decision is concerned, is that hevisits these houses and the nursing home just as an advocate attends theCourts for the purpose of, and in the course of, carrying on his profession,and no more. Instances of the same kind arise in the case of otherprofessions also.
For the above reasons I am unable to agree with the Board of Reviewin their decision that the deduction claimed by the appellant here was thecost of travelling between residence and place of business or employment,for the reason that the Supreme Court sitting in its Appellate Jurisdictionat Hulftsdorp is not a place of business or employment of the appellant,within the meaning of section 10 (a) of the Income Tax Ordinance, 1932.Whether or not these travelling expenses were incurred by the appellantin the production of his income, within the meaning of section 9 (1), isof course not a matter that arises for any decision on the case stated.
The further question argued before us as to whether the deductionclaimed was for travelling from his residence or chambers, need not, inview of my conclusion above, be considered, although this, I think, wouldbe mainly a question of fact.
I would therefore answer "Ins question of law as above set out. In theevent therefore the appellant succeeds in his appeal. It was agreed thatthere should be no order in respect of costs, whatever our decision be,except that the appellant should be entitled to a refund of the sum ofRs. 50 paid on the case being stated, if he be successful. He will thereforebe entitled to be repaid that sum.
DRIEBERG J.—Rajapakse v. Commissioner of Income Tax.
203
Dbzsberg J.—
This is a case stated under the provision of section 74 of the IncomeTax Ordinance, No. 2 of 1932, by the Board of Review on the applicationof the assessee who had appealed to the Board from the decision of theIncome Tax Commissioner. The assessee is an advocate residing inColombo and practising mainly in the Appeal Court. He has his chambersin his house, and he claimed that in the assessment of his taxable incomeallowance should be made for the cost of his travelling from his chambersto the Supreme Court, which amounted to Rs. 640 a year. The Com-missioner decided that this was the cost of travelling between his residenceand place of business and that under section IQ (a) of the Ordinance nodeduction could be made for it. The assessee appealed to the Boardwho upheld the decision of the Commissioner. He then asked, undersection 74 (1), that the Board should state a case on a question of law forthe opinion of this Court. A “ case stated ” should, I think, contain inaddition to a statement of the facts the matter of law submitted fordecision formulated as a question. This has not been done here, thoughthe Board observed the requirements of section 74 (2) that the casestated should " set forth the facts and the decision of the Board
I have referred to this for this reason, the only material before us is thecase stated by the Board under section 74 (2). It is there stated that theassessee claimed that he was entitled to the deduction of Rs. 640 on theground that they were expenses incurred in the production of his incomeand under section 9 (1) should be deducted in ascertaining his taxableincome. The Commissioner decided that the claim was barred bysection 10 (a) and assessed his taxable income at a certain amount; thiswas upheld by the Board. The members of the Board stated theirdecision as follows : —“ We the members of the Board who heard theappeal upheld the decision of the Commissioner and the assessment wasconfirmed as we were of the opinion that the deduction claimed was thecost of travelling between residence and place of business or employmentwithin the terms of section 10 (a)Now if these expenses are barred bysection 10 (a) there still remained the question expressly raised by theassessee that he was entitled to a deduction of them under section 9 (1).This aspect of the matter was not dealt with by the Board, but as theBoard upheld the Commissioner’s assessment, which was what theassessee appealed from, I must assume that the Board was of opinionthat the expenses did not fall within section 9 (1).
This shows the necessity for the Board, when acting under section 74,to formulate expressly the questions of law for the decision of this Court.
We were told, however, that the only question for our decision waswhether the assessee’s claim fell within section 10 (a). In dealing withthis, it will be necessary to refer to section 9 (1), but it will be understoodthat anything that I say is not to be considered as a ruling on theapplicability of that provision to this case, for argument was notdirected to it.
Chapter III. of the Ordinance consists of two sections, 9 and 10, and hasthe title “ Ascertainment of Profits or Income ”. Section 9 (1) providesthat, subject to the provisions of sub-section (2), there shall be deducted,
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DRIEBERG J.—Rajapakse v. Commissioner of Income Tax.
for the purpose of ascertaining the profits or income of any person fromany source, all outgoings or expenses incurred hy such person in theproduction thereof including the several causes of expenditure set out insub-sections (a) to (g). Sub-section (2) of section 9 deals with certainexceptions concerned with the profits or income from land.
Section 10 (a) enacts that for the purpose of ascertaining the profits orincome of any person from any source, no deduction shall be allowed inrespect of domestic or private expenses, including the cost of travellingbetween residence and place of business or employment.
The assessee says that in that part of his residence which he uses as hischambers he gives interviews to proctors and clients, deals with matterssubmitted for opinion and generally does all that work of an advocateunconnected with or not requiring appearance in a Court. I take it thathe would ordinarily be engaged there until he left for the Courts and thaton days on which the Courts do not sit he would spend a considerable partof his lime there on that part of his work as an advocate which. I havereferred to. There is no provision in Colombo for chambers in thevicinity of the Courts, advocates are obliged to use a part of theirresidence for the purpose, and we were told that the income tax author-ities recognize this and allow them for this reason a deduction from therent they pay. In these circumstances, can it be said that in going to andreturning from the Courts he travels between his residence and his placeof business or employment ? It was conceded that the Courts could notbe regarded as the assessee’s place of employment and I need only considerthe question from the point of view whether they can be considered hisplace of business.
A part of Mr. H. V. Perera’s argument was that the word “ business”in itself excluded the occupation of an advocate, which is a profession andnot a business. There is no doubt that used in that special sense it wouldhave that effect. To speak of a person as engaged in business impliesoccupation in trade or commerce and not in a profession such as law ormedicine. But the word has a wide range of meaning and can be used tomean generally the work that a man is engaged on, whether it be a tradeor a profession. The Oxford Dictionary recognizes the use of the wordin these different senses. It appears to me, however, that it was notintended to use the word “ business ” in section 10 (a) in a special sense,but that the words “ business ” or “ employment ” were intended toinclude all those activities of a person in the nature of a “ trade, business,profession or vocation” which are a source of profit or income andchargeable with tax under section 6(1). It will be noted that (a) and theother sub-sections of section 10 deal with matters which are not to beexcluded in ascertaining the income derived from any source; the word“ any ” is important.
This however does not conclude the question before us, for we have todeal not with the word “ business ” alone but with the phrase “ place ofbusiness” in relation to the circumstances of this case. Here again weare confronted with the uncertainty whether the phrase is used in aspecial sense, or in the larger sense which I incline to think is the intentionof the Ordinance—the place of a person’s occupation which is a source of
DRIEBERG J.—Rajapakse v. Commissioner oj Income Tax.
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profit or income, whether it be a trade, business, profession or vocation.According to the Oxford Dictionary, the phrase is usually used in thespecial sense and includes a shop, office, warehouse or commercial estab-lishment. Mr. H. V. Perera contended that an advocate could have noplace of business, the word “ business ” having no application to thecalling of an advocate, and his travelling from his house or chambers tothe Courts does not fall within section 10 (a). The Deputy Solicitor-General argued that his chambers in his residence are not a place ofbusiness of his, and that his movement to the Courts and back must beregarded as travel between his residence and place of business which, hesaid, was the Courts. The question is not free from difficulty. Severalcases were cited to us which, however, are of no real help as there isnothing similar to section 10 (a) in the English or the Indian Acts. Icannot agree with the Deputy Solicitor-General that the assessee’schambers cannot be regarded as his place of business or at any rate oneof his places of business. He does there that work of an advocate whichis not done in the Courts, and a place where he does his professional workmust be regarded as his place of business, accepting the word in thegeneral sense of meaning his income-yielding occupation. He does inchambers the work of an advocate and receives remuneration for it. Inthe Courts he also does the work of an advocate, but of another class, forwhich he receives remuneration. Some work for. which he is remuneratedmay be done partly in chambers and partly in Court.
If I am right in my view that both his chambers and the Courts are hisplaces of business, his expenses of travelling from one to the other willnot be within the section. Whether he is entitled to a deduction for themor not will depend on whether they are to be regarded as outgoings orexpenses incurred by him in the production of his income; this question,however, is not before us.
In my opinion one cannot say that his movement to the Courts is notfrom his chambers for the reason that the chambers are part of hisresidence and that he may not leave direct from chambers to the Courtsbut that he may probably leave from his residence, assuming that thereare separate exits. But these are superficial considerations which do nottouch the real question. We are concerned with the assessee as anincome-producing individual and his work and movements as such; wehave the fact that for a certain part of the day before 11 o’clock he isengaged in that work in his chambers and that he then proceeds with,I take it, the least possible loss of time to begin in the Courts another classof work, or it may be another stage of work already partly done in cham-bers. His movement is from one place of business to another and itcannot cease to be that for the reason that he may in the interval, for somepurpose, enter the residential part of his house. Section 10 (a) deals withtravel from one’s residence to a place where one’s business begins andfrom which one returns to one’s residence. , Such travelling is uncon-nected with one’s business and its cost is placed in the same class asexpenses of a domestic or private nature.
I therefore hold that the expenses incurred by the assessee in travellingfrom the premises in which are his residence and his chambers to the
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GARVIN S.P.J.—Ferdinando v. Nagalingam.
Courts are not costs of travel between his residence and place of businessor employment within the meaning of section 10 (a) of the Income TaxOrdinance.
Counsel were agreed that as this was a test case we should make noorder as to costs. The assessee is, however, entitled to a refund of thefee of Rs. 50 paid under section 74 (1).
Appeal allowed.