This appeal necessitates a consideration of a portion of the Arkansas income tax law (§ 84-2001 et seq., Ark. Stats.).
Appellee, at all times a citizen and resident of Craig-head County, Arkansas, in 1943, 1944 and 1945 engaged in the business of drilling some wells for oil in the State of Illinois. The wells were “dry holes”; and appellee claimed, as deductible from his Arkansas State income, the amount expended for -such drilling. Appellant, as Commissioner of Revenue of Arkansas, denied that the items were deductible; and this appeal challenges the correctness of the Chancery Court decree which allowed the deductions.
We affirm the Chancery decree. Section 84-2016, Ark. Stats. 1947, contains ten paragraphs, each listing items that may be deducted in computing the net income of a taxpayer. These are contained in lettered paragraphs (a) to (j) inclusive. Paragraph (a) allows as deductions “All the ordinary and necessary expenses paid during the income year in carrying on any trade or business, . . . ” Paragraph (d) lists, as items for deduction, “Losses sustained during the income year and not compensated for by insurance or otherwise, if in-ourred in trade or business and sucli losses incurred in any transaction entered into for profit, though not connected with the trade or business, . . The appel-lee incurred such expenses in drilling for oil, and is entitled to claim them as deductible items under one or the other of the foregoing sections. Our State Statute allowing these deductions is so clear that cases decided under the Federal Statute are inapplicable.
Appellant urges that Act 162 of. 1943,1 in relieving an Arkansas resident from paying taxes on income received from outside the State, necessarily implies that deductions are not to be allowed on losses incurred in business ventures engaged in outside the State. One sufficient answer to the appellee’s contention — as applied to the facts in the case at bar, rather than to some sup-posititious case — is that Act 162 does not mention or attempt to change the Statute regarding deductible items. It is concerned with income and not with deductions. The purpose of the Act, as stated in the caption,2 was to protect an Arkansas resident from double payment of income tax.
The appellant in the case at bar is seeking by implication to use Act 162 to prevent the taxpayer from claiming items deductible under § 84-2016, Ark. Stats. 1947. Tax acts are to be construed in favor of the taxpayer; and matters not appearing in a taxing Statute are not to be read into it when such result is adverse to the taxpayer through implication. Our cases recognizing and declaring this salutary interpretation of the law are legion. A few of them are: Fort Smith Gas Co. v. Wiseman, 189 Ark. 675, 74 S. W. 2d 789; Wiseman v. Arkansas Utilities Company, 191 Ark. 854, 88 S. W. 2d 81; Hardin v. Fort Smith Couch & Bedding Co., 202 Ark. 814, 152 S. W. 2d 1015; U-Drive-’Em Service Company, Inc. v. Hardin, 205 Ark. 501, 169 S. W. 2d 584; McCain v. Crossett Lumber Company, 206 Ark. 51, 174 S. W. 2d 114; McLeod v. Kansas City Southern Railway Co., 206 Ark. 281, 175 S. W. 2d 391; McLeod v. Commercial National Bank, 206 Ark. 1086, 178 S. W. 2d 496; Moses v. McLeod, 207 Ark. 252, 180 S. W. 2d 110; City of Little Rock v. Ark. Corporation Commission, 209 Ark. 18, 189 S. W. 2d 382; and Cook v. Ark.-Mo. Power Corp., 209 Ark. 750, 192 S. W. 2d 210.
The decree of the Chancery Court is in all things affirmed.
Justices George Rose Smith and Dunaway dissent.This Act is captioned “AN ACT to Prevent Double State Income Taxation of Individual Residents of Arkansas.” Section 1 of the Act provides that when the gross income of an Arkansas resident includes income derived from property outside the State or business transacted outside the State, the Arkansas tax shall be first computed as if all the income were derived from inside the State; and then a credit shall be given for the amount of income tax owed by the Arkansas resident to the State or Territory from which such income has been received by the taxpayer.
Section 2 provides that no income arising from use, production, or sale of real estate situated in another State shall he included in the gross or net income of a resident of Arkansas.
While a Caption, or Title, is not a part of an Act, yet, when it expresses the Legislative intent implicit in the text, it may be referred to in connection with the overall purpose of the Act. Pruitt v. Sebastian County Coal & Mining Co., 215 Ark. 673, 222 S. W. 2d 50.