The main legal point established in the judgment is the interpretation of 'transacting business for profit' under the Madras District Municipalities Act, 1920, and the determination of the place where a trade is exercised for the purpose of assessing companies tax.

Beaseley, J.

1. The defendant, the Municipal Council of Diadigul, purporting to act under Section 92, Madras District Municipalities Act, 1920, and Rule 16, Schedule 9 to that Act has, assessed the plaintiff company to companies tax for the half years ending 30th September 1922, 31st March 1923, 30th September 1923, and each of the half years of 1924 in the sum of Rs. 250 in respect of each half year. Under protest the plaintiff company paid this tax and has now filed this suit to recover the sums so paid which amount to Rs. 1,500. The plaintiffs contention is that it does not transact business in Dindigul.

2. Before dealing with the facts of this case and the legal arguments, I will refer to the section and the Rule of the Madras District Municipalities Act, 1920, under which the plaintiff company has been assessed by the defendant- Section 92 is headed "tax on companies" and reads as follows:

If the Chairman publishes a notification under Section 80 that a companies tax shall be levied every company transacting business within the municipality for profit or as a benefit society shall after the date specified in the said notification pay a half-yearly tax on its paid-up capital on the scale shown in Schedule 4, if and as soon as it has transacted business in the municipality for the period laid down in Section 95.

3. The explanation reads as follows:

Whenever a company employs a Servant or agent to represent it for the purpose of transacting business in a municipality, such company shall be deemed to transact business within the municipality and such servant or agent shall be liable for the tax in respect of the companys business, whether or not he has power to make binding contracts on behalf of the company.

4. I will next refer to Schedule 4, Rule 16 which sets out the scale upon which the companies are to be assessed. Therein companies are to be assessed upon their paid-up capital Scale A deals with companies with a paid-up capital of more than ten lakhs. Those companies are to be assessed to a half yearly tax of Rs. 250 and that is the tax levied upon the plaintiff company. There is a proviso that

any company, the Head Office or a branch or principal office of which is not in the municipality and which shows that its gross income received in or from the municipality has not in the year immediately preceding the year of taxation exceeded...

then follows a scale.

5. I will now deal with the facts as they came out in evidence which are somewhat different to those set out in the plaint because in the plaint it is merely stated that the plaintiff company through an agent in Dindigul only purchases produce, i.e., cotton and groundnuts there and that the contracts with reference to the purchase of this produce are only concluded in Madras and that produce is sold abroad. If these had been the only facts, this matter would have presented much less difficulty than it does, but it is complicated by the fact that the plaintiff company is also the managing agent of another company, namely the Tinnevelly Cotton Press Co. Ltd., a company, which undoubtedly does carry on business in Dindigul and elsewhere through the agency of the plaintiff company. In Dindigul that business is pressing and ginning cotton and decorticating groundnuts. There are no directors of the Tinnevelly Cotton Press Co. Ltd., and the whole of its affairs and business are conducted by the plaintiff company as its managing agents whose remuneration is at the rate of four annas for every 300 lbs. weight of cotton or the material pressed or baled by the company. The powers of the managing agents are very wide indeed. This is apparent from the memorandum and articles of association of the company, Clause 80 and onwards. At Dindigul there is a ginning and pressing and decorticating plant owned by the Tinnevelly Company and the staff working that plant is paid in the first place by the managing agents who debit the company with those payments. The property tax in respect o