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COMMISSIONER OF INCOME TAX v. RODGER
NLR35V169
1933 Present: Drieberg
J. and Barber A. J.
COMMISSIONER OF INCOME TAX v. RODGER.
D. C. (Inty.) Colombo No. 105/1933 Special.
Income tax-Assessment of
income-Change of employer but not employment-Meaning of words "Commence an
employment"-Ordinance No. 2 of 1932, s. 11 (4).
Where a person goes over to a new employer within a year preceding the year of
assessment but continues in the same kind of employment, he does not " commence
to carry on an employment" within the meaning of section 11 (4) of the Income
Tax Ordinance.
CASE
stated under the provisions of section 74 of the Income Tax Ordinance of 1932
regarding the assessment of the income of the assessee for the year April 1,
1932, to March 31, 1933. The assessee, an accountant by profession, was employed
by Brown & Company, on a salary of Rs. 400 per month from April 1, 1931, to
February 28, 1932. On March 1, 1932, he joined Walker & Greig, also as
accountant on a salary of Rs. 650 a month. His income was assessed at Rs. 7,800.
The question submitted was whether the assessee in entering the service of
Walker & Greig on March 1, commenced an employment on that date so as to bring
him within the provisions of section 11 (4) of the Income Tax Ordinance.
L. M. D. de Silva, K.C., S.-G. (with him Wendt, C.C.), for appellant.-The
question is whether the respondent ceased one employment and commenced another
within section 11 (4). It is necessary to examine the object which section 11
was intended to achieve. Section 11 (1) sets out the general rule. The tax is to
be paid on the income of the year before the year of assessment. The ideal
method of assessment is the actual income earned during the year of assessment.
That is not possible. Therefore the preceding year is made the test. But in
certain specified instances an attempt is made to approximate as closely as
possible the income of the year of assessment. Sub-section (6), for example,
provides for cases where a person ceases an employment during the year of
assessment. The income for the preceding year is not considered but the actual
income for the year of assessment is taxed.
[DRIEBERG J.-If in the same employment his salary was raised he would be
taxed on the total income for the year ?]
Yes.
[DRIEBERG J.-But if he changes his employer he is taxed upon another
basis ?]
Yes. The question for decision is whether the section applies only to cases
where a person commences a business on employment in Ceylon for the first time
or whether it is applicable to cases where a person changes an employer but
continues in the same kind of employment. To determine what an employment is,
one has to consider the object
of the section. The word
'employment' in England is used in an entirely different meaning, and English
decisions will not be of any help. The words of the Ordinance are " Commence to
carry on an employment", not " Commence employment". ' Employment' can be used
merely to indicate that a person is doing something, e.g., section 114 of the
Criminal Procedure Code uses the word in that sense. The word ' an' takes it out
of that sense in the Income Tax Ordinance. An employer from the point of view of
' an' employment is an essential ingredient. If you change employers you change
an employment. If the word is used in this specific sense then the respondent
has changed his employment. Suppose the respondent had been dismissed by his
employer. Could it not be said that his employment had ceased ? Then if he was
subsequently re-employed would he not commence an employment ? The only other
change possible is a change in the nature of the employment. But they are both
equally essential ingredients in the definition of an employment.
[BARBER J.-Does not the word ' Commence' mean ' first engages in'?]
No. It is true that when a man first engages in he commences. But that is not
exhaustive. A re-commencement is also a commencement. When
