De Blois v. Comm'r of Corp.

• Decision Date: 12 September 1931
• Parties: DE BLOIS et al. v. COMMISSIONER OF CORPORATIONS AND TAXATION.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

276 Mass. 437

177 N.E. 566

DE BLOIS et al.

v.COMMISSIONER OF CORPORATIONS AND TAXATION.

Supreme Judicial Court of Massachusetts, Suffolk.

Sept. 12, 1931.

Report from Superior Court, Suffolk County; Winfred H. Whiting, Judge.

Complaint by George L. De Blois and another by way of appeal from the refusal by the Commissioner of Corporations and Taxation to abate an income tax. On report from the superior court.

Tax abated as prayed for.

R. A. Cutter, of Boston, for plaintiffs.

C. F. Lovejoy, Asst. Atty. Gen., for defendant.

RUGG, C. J.

This is a complaint by way of appeal from the refusal by the respondent to abate an income tax assessed upon the complainants. St. 1926, c. 287, § 3. The complainants are trustees of a real estate trust, beneficial interests in which are represented by transferable shares. They are owners of improved real estate in Boston. They have filed an agreement (authorized by G. L. c. 62, § 1(c)(d)(e), as most recently amended by St. 1926, c. 160) to pay income taxes due upon the income from the trust. The respondent assessed a tax upon the net income of the trust derived from rents for the use and occupation of real estate. The question for decision is whether such net income is subject to taxation. The relevant words of statutes pertinent to this issue are from the following sections of G. L. c. 62, and are not affected in their bearing upon the case at bar by later amendments, to which, therefore, no reference is made: Section 5: ‘Income of the following classes received by any inhabitant of the commonwealth during the preceding calendar year shall be taxed as follows: * * * (b) The excess over two thousand dollars of the income, as defined in section six, derived from professions, employments, trade or business shall be taxed at the rate of one and one half per cent. per annum. * * *’ Section 6: Income taxable under subsection (b) of section five shall be the gross income from the profession, employment, trade or business * * * not including income exempt from taxation under this chapter or taxable hereunder otherwise than under said subsection (b) * * *' Section 22: ‘Every individual inhabitant of the commonwealth, including every partnership, association or trust, whose annual income from all sources exceeds two thousand dollars shall annually make a return of his entire income, except income derived (a) from real estate. * * *’ Section 35: ‘The commission shall determine from the returns required by this chapter, or in any other manner, the income of every person taxable thereunder, and shall assess thereon the tax hereby provided. * * *’

It is a canon of statutory interpretation not to treat any words as superfluous but to give to all the language some meaning, and not to overemphasize one word or part at the expense of another word or part, to the end that so far as possible the enactment shall constitute a consistent and harmonious whole capable of producing a rational result in consonance with the presumed intent of the Legislature. Kennedy v. Commissioner of Corporations and Taxation, 256 Mass. 426, 429, 152 N. E. 747. It is to be kept in mind that tax laws are to be strictly construed. The right to tax is not to be implied, but must be plainly conferred. Doubts are resolved in favor of the taxpayer. Cabot v. Commissioner of Corporations and Taxation, 267 Mass. 338, 340, 166 N. E. 852, 64 A. L. R. 1277.

The word ‘business' as used in said section 5 is a word of wide import. It may include a large field of activities undertaken for gain and profit. Whipple v. Commissioner of Corporations & Taxation, 263 Mass. 476, 485, 486, 161 N. E. 593. It is not employed in any abstract sense but in a highly practical signification. It must be taken to be limited by the specific implications of section 22(a) to the effect that no return is required of income derived from real estate. The statutory provisions as to the returns by inhabitants subject to an income tax are explicit. They are designed to afford to the taxing official complete and accurate information in order to serve as the correct basis for computing the tax. While of course that official is not bound by the return, the purpose of the statute is to give him through the returns knowledge as to the amounts and sources of the income of the inhabitants. It cannot rightly be thought that the Legislature, if it had intended to impose an income tax upon income derived from the business of renting real estate, would have specified that no return be made of income of that nature; that is to say, income from real estate. The income here taxed came from the rents of real estate. The tax imposed by G. L. c. 62, is a property tax and not an excise tax. Hart v. Tax Commissioner, 240 Mass. 37, 39, 132 N. E. 621. A tax upon income derived from real estate is a tax upon real estate. Pollock v....