1. CORNELIUS, C. J.-These three certificated appeals by the Lahore-Sukheki Transport Society of Sheikhupura, which is registered as a Co-operative Society raise a common question, namely, as to the immunity of profits made by the Society to taxation under the Excess Profits Tax Act, 1940.
2. There is an exemption granted by notification of the Central Government under section 60 of the income-tax Act 1922 in favour of such profits, and it is mainly on the basis of this exemption that the Society attempted to resist successive assessments to tax under the Excess Profits Tax Act. In each case, the matter was taken up before the Appellate Assistant Commissioner, thereafter before the Income-tax Appellate Tribunal and following the rejection of the plea of immunity by both these authorities a reference was obtained to the High Court, where also the Society was unsuccess--ful.
3. It was, however granted a certificate to enable it to appeal to this Court.
4. The Appellate Assistant Commissioner based his rejection of the plea upon the single fact of the absence of express exemption by or under the Excess Profits Tax Act. He declined to consider the argument that excess profits tax was a modified form of income-tax and therefore "in accordance with the spirit of the law exemption from income-tax must be held to cover excess profits tax also".
5. The Income-tax Appellate Tribunal came to the conclusion that there was "no doubt that the profits of the appellant Society are ordinarily chargeable to income-tax by virtue of the provisions contained in section 4 (1) of the Act" and that the express exemption by notification under section 60 "does not affect the applicability of section 4 (1) to the profits of such business". They concluded that "if this section applies then it follows that the profits would be chargeable to excess profits tax".
6. In the High Court, the learned Judges distinguished between the aspect of chargeability and that of an actual charge and came to the conclusion that the mere fact that there was an exemption in favour of the profits of a Co-operative Society, by specific notification under section 60 did not affect the position that those profits were initially chargeable under section 4 of the Income-tax Act. The learned Judges found support for their view in the fact that in section 4 of the Excess Profits Tax Act, there was an express exemption from payment of excess profits tax in respect of profits which are, under the provisions of sub--section (3) of section 4 of the Income-tax Act, 1922, exempt from income-tax. They went onto observe that if it had been the intention of the Legislature to protect exempted incomes other than those mentioned in the proviso to subsection (l) of section 4 of the Excess Profits Tax Act from excess profits tax, the Legislature would have made it clear by mentioning those incomes.
7. The argument which was sought to be presented before us by Mr. Iqbal for the Society was based largely upon the fact that the charging section, namely, section 4 opens with the words "Subject to the provisions of this Act". Section 5 provides for the application of the tax, i. e., that it should apply "to every business of which any part of the profits made during the charge--able accounting period is chargeable to income-tax by virtue of the provisions of sub-clause (i) or sub-clause (ii) of clause (b) of subsection (1) of section 4 of the Income-tax Act, 1922, or of clause (c) of that subsection". The argument was that the tax could not be assessed otherwise than as provided by section 5, and it was sought to interpret the latter section as if by the, word "chargeable" the reference was to the fact of a charge being actually made..
8. Now, section 4 is not the charging section in the Income-tax Act. The charging section is section 3, but section 4 provides a machinery by which the "total income" of different kinds of assessee may be ascertained with precision. The effect of section 5 of the Excess Profits Tax Act is to confine the assessm ent of excess profits tax to (a) persons who are resident in the taxable territories in respect of incomes accrued within those territories during the "previous year", or such as have accrued or arisen in the same period without the taxable territories, as well as (b) in the case of a person not resident in the taxable territories, that income which accrues to him within the taxable territories during a "previous year". This effect is produced by making a limited reference to section 4 of the Income-tax Act, which however specifies other forms of income, whose omission from mention in section 5 of the Excess Profits Tax Act renders them immune to the latter tax. Section 4 of the Income-tax Act also contains in subsection (3) a lengthy list of exempted income which is not to be included in the total income of the assessee for purposes of income-tax, and by the first proviso to section 4 of the Excess Profits Tax Act, it is expressly provided that such income shall also be exempt from the latter tax. By section 60, Income-tax Act, power was given to the Central Government by notification to make an exemption in respect of any class of income for the purposes of the Income-tax Act, but since 1939, this power has been expressly withdrawn, so that as the Income-- tax Act stood when the Excess Profits Tax Act was enacted in 1940, there was no possibility of further exemptions being granted under section 60 aforesaid. That should have rendered it a comparatively simple matter to make provision for income, which was saved from income-tax by notification, to be saved also from the new tax.
9. In order to give validity to the argument based upon the charging section being expressed to be "subject to the provisions of this Act", in the sense desired to secure the present exemption, it would have been necessary that in section 5, Excess Profits Tax Act, also there should have been words importing the exempting provisions of the Income-tax Act, as well as exemptions granted under those provisions, e. g. Under section 60. In the absence of those words, the expression "is chargeable" cannot be taken to mean "would be chargeable but for an exemption". It must be taken in the wide sense of section 4 (1) of the Income---tax Act, by which income which is to be liable to be charged to income-tax in the first instance is specified. We agree with the High Court that the fact that one particular kind of exemption is mentioned in the first proviso to section 4 (1) of the Excess Profits Tax Act, is a good ground for holding that the Legislature did not intend to allow any other kind of exemption for the purposes of a charge under the Excess Profits Tax Act. This construction cannot be refused to so clear an example of the maxim expressio unlus est exclusio alterius.
10. For these reasons, these appeals are dismissed. As the appellant is a Co-operative Society, we leave the parties to bear their own costs.