1925 (10) TMI 4

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....aim that they are entitled to the deduction above mentioned. The Commissioner of Income Tax was of opinion that the deduction claimed was not an allowable item. 3. The answer to the question put to us depends in our opinion upon the nature of the profession tax levied by the Municipality. If the profession tax is a contribution from the income of the assessee to the Municipality it will stand on the same footing as Income Tax itself which is such a payment to the Government. It is clear in assessing the income of a person the Income Tax he pays could not be deducted for what is paid is a part of the income itself and not an expenditure for earning that income or profit. It was so ruled in Ashton Gas Co. v. Attorney-General (1906) AC 10 a....

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....ult to treat the profession tax as a payment by them to earn their income. It is clear in these cases the Municipality is claiming a part of their income as a tax. A different rule, it seems to us, cannot be applied in the case of men who make their income by professional services. It is argued that because Section 111 uses the words "by way of license fee" we must hold that the payment of the profession tax is for the purpose of obtaining a license to carry on one's profession in the City. We are unable to accept this argument. The Act deals with several matters in which the obtaining of a license is a prerequisite to the carrying on of a business or profession within the Municipal limits. We find examples of it in Chap. XII of the Act....

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....se words appear to me to mean for the purpose of enabling a person to carry on and earn profits in the trade, etc. I think the disbursements permitted are such as are made for that purpose. It is not enough that the disbursement is made in the course of, or arises out of, or is connected with, the trade, or is made out of the profits of the trade. It must be made for the purpose of earning the profits." Following that view we consider that the payment of profession tax does not fall within Section 11. 6. The cases of Smith v. Lion Brewery Co., Ltd. (1911) AC 150 and of Usher's Wiltshire Brewery, Ltd. v. Bruce (1915) AC 433 were cited by the learned Counsel for the assessees. But, instead of helping him, they show what may properly be....