The Commissioner, Corporation of Madras vs Messrs. Thiru Arooran Sugars Ltd. Madras and Messrs. Vekatesa Thiagarajan (P.) Ltd.

Kailasam, J.—The Commissioner, Corporation of Madras, has filed this petition to revise the judgment of the Court of Small Causes at Madras holding that the respondent, Company is not having its head or principal office in the City of Madras and therefore liable to pay a tax of Rs. 25 a year under the provisos to R. 7, Part II of Sch. IV of the Madras City Municipal Act. Section 110 of the Act enables the City Municipal Council by a resolution to tax companies in the City of Madras. The tax may be levied on companies that transact business within the City in any half year for not less than sixty days in the aggregate and such companies are liable to be assessed to tax in accordance with the Rules in Sch. IV of the Act. It is not disputed that the respondent is transacting business in the City of Madras. S. 113, Cl. 1 defines the expression ''transact business'' in S. 110. It is deemed 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. Cl. (2) of that Section provides that a company having an office or an agent firm to represent, it shall be deemed to transact business within the city. There can be no doubt that the respondent-company comes within the definition of transacting business under S. 113 and as such is liable to be taxed under Sch. IV. Sch. IV Part II, R. 7 made under S. 110 of the City Municipal Act provides that the company shall be assessed by the Commissioner on the scale provided in the rule. The proviso to to the rule enables the Commissioner to levy tax on a company whose head or principal office is not in the city and which shows the income from the city according to the rate given under the proviso. The Court of Small Causes held that though the company had its registered office and was transacting business in the City of Madras, the petitioner had not proved that the respondent-company was having its Head or Principal Office in the City of Madras and was therefore liable to be taxed under the provisos only.

Mr. Chengalvarayan, Learned Counsel for the Corporation of Madras contended that the Court of Small Causes was in error in holding that the respondent-company was not having its head or principal office in the City of Madras. The material on which Learned Counsel seeks to substantiate that the respondent-company is having its head or principal office in Madras is referred to by the Taxation Appeals Committee, Corporation of Madras, in its order. Four documents were filed but no witnesses were examined on behalf of the Corporation. The documents are Exs. A to D. Ex. A is the report of the Fifth Annual General Meeting held at the registered office of the Company at Express Estate. Mount Road, Madras, on 29th June 1960. The Taxatian Appeals Committee relied on paragraphs 4 and 6 of the report of the Fifth Annual General Meeting (Ex. A). Paragraph 4 is a resolution appointing Messers. Lal Gopikrishna Gokuldoss, 114, Mint Street, Madras, as sole selling agents for a further period of two years from 1st January 1960 Paragraph 6 is a resolution appointing Messrs. Venkatesa Tyagarajan (Private) Ltd., as Managing Agents of the Company for a period of five years. It is not disputed by the respondent-company that they have a registered office at Madras and that at the Fifth Annual General Meeting of the shareholders at the registered office at Madras several resolutions were passed. But it is disputed the contention of the petitioner that it is having its head or principal office of business at Madras. According to the respondent, the head or principal office of business is only in Tanjore district where the factory is situated. The next document that is relied on is Ex. B which is a Memorandum and Article of Association of the Company. No particular Article in the Memorandum and Articles of Association was relied upon to establish that the respondent is having its head or principal place of business at Madras. Ex. C is a list of persons employed in the registered office at Madras and Ex. D shows that the Managing Agents have their office at Express Estate, Mount Road, Madras. From the four documents Learned Counsel for the petitioner submitted that the Corporation had established that the head or principal office of the respondent is at Madras. I am unable to accept this contention. The fact that the registered office is at Madras or that the meetings were being held at Madras or that the managing agents were residing at Madras or that the selling agents were appointed from the City of Madras would not establish that the head or principal office of the respondent is at Madras. According to the respondent, its head or principal office is at Vadapathimangalam, where the factory is situated. On the evidence adduced by the Corporation of Madras, it cannot be said that it has been established that the head or principal office of the respondent is at Madras. Learned Counsel for the petitioner relied on three decisions in support of his contention that on the materials available it should be held that the head or principal office of the respondent is at Madras. This first decision on which Learned Counsel relied on is Aberystwith Promenade Pier Company v. Cooper (1866) L.J. (Q.B.) 44. It was held in that decision that the principal office of the company was at Westminster. Cockburn, C.J., observed that it has been held that a railway company does not carry on business at any place other than its principal office at which its business is managed. It was also found in that case that the only office was at Westminster and therefore the Court had no difficulty in coming to the conclusion that the principal place of business was at Westminster. But this case does not in any way advance the contention of the petitioner. The next case relied on is Carton v. The Great Western Railway Company (1858) L.J. (Q.B.) 375 at 378. The question that was considered in that case was whether the Great Western Railway had its principal office at Bristol or in London. Taking into consideration that the London office alone the staff of the company was stationed and the Central Government of the railway was carried on, that the Secretary was there and that the ordinary meetings of the directors for the general purposes of the company were held, the Court came to the conclusion that the principal office was in London. In that case the conclusion was arrived at on facts. In this case, the petitioner has not let in any evidence to show apart from the documents relied on that the head or principal office is at Madras. The last decision relied on it is De Beers Consolidated Mines Limited v. Howe (1906) A.C. 455, where the Court had to consider whether a foreign Corporation could reside in Britain for the purpose of income tax. The House of Lords held that the test of residence is not where it is registered, but where it really keeps house and does its real business, the real business is carried on where the central management and control actually abide. In deciding that case the Privy Council also observed that the question is one of fact and has to be determined upon a scrutiny of the course of business and trading. In that case though the mine was situated in South Africa on the facts the House of Lords came to the conclusion that the company was resident in Britain as the Management was carried on form Britain. The point that was considered in that case was whether a foreign Corporation could be said to reside in Britain. The test of residence according to the House of Lords was to see whether the company really kept house and did business though it was registered in some other place. This decision contemplates the possibility of the registered office being in one place and the head or principal office in some other place. In the present case the burden is entirely on the petitioner to prove that the head or principal office of the company is at Madras. The Court of Small Causes on a consideration of the facts came to the conclusion that the petitioner had not proved that the respondent had its head or principal office at Madras I am unable to say the lower Court has acted illegally or with material irregularity in the exercise of its jurisdiction to call for interference. In the result the petition is dismissed with costs.