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Visalakshi Vs. Income-tax Officer, City Circle Ii, Bangalore and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberWrit Petition Nos. 1918, 1991 to 1997 of 1964
Judge
Reported in[1968]67ITR150(KAR); [1968]67ITR150(Karn)
ActsIncome Tax Act, 1961 - Sections 2, 4, 4(3), 4(5), 4(10), 12, 13 and 156; Compulsory Deposit Scheme Act, 1963 - Sections 4(3); Finance Act, 1963
AppellantVisalakshi
Respondentincome-tax Officer, City Circle Ii, Bangalore and ors.
Appellant AdvocateK. Srinivasan, Adv.
Respondent AdvocateS.R. Rajasekhara Murthy, Adv.
Excerpt:
direct taxation - compulsory deposit - matter pertaining to paragraph 4 of compulsory deposit (income-tax payers) scheme, 1963 - petition seeking direction to income-tax officer to receive compulsory deposits for assessment year commencing on 01.04.1963 and to give petitioners deduction from additional surcharge claimable under section 4 (3) - as per first proviso to paragraph 4 (1) deposit had to be made either within 30 days of service of notice of demand under section 156 or by 30.06.1964 whichever was earlier - incase period had not expired or person who had not been served with demand notice or in whose case assessment had not been completed could make deposit within longer period which expired on 30.06.1964 - plea that additional surcharge became payable by petitioners when income.....somnath iyer, j. 1. in these matters, we are asked to pronounce on the validity of paragraph 4 of the compulsory deposit (income-tax payers) scheme, 1963, made by the central government in exercise of the power conferred by section 5 of the compulsory deposit scheme act, 1963 (act no. xxi of 1963). 2. the question arises thus : he compulsory deposit scheme act, 1963 (act no. xxi of 1963), which was a law made by parliament, came into force on june 1, 1963. section 2 of that act provided that it shall apply to the categories of persons enumerated in it including persons liable to payment of tax under the income-tax act, to whom clause (b) of that section referred. the purpose of the act was to compel deposits by person by whom additional surcharge was payable in respect of any assessment.....
Judgment:

Somnath Iyer, J.

1. In these matters, we are asked to pronounce on the validity of paragraph 4 of the Compulsory Deposit (Income-tax Payers) Scheme, 1963, made by the Central GOvernment in exercise of the power conferred by section 5 of the Compulsory Deposit Scheme Act, 1963 (Act No. XXI of 1963).

2. The question arises thus : he Compulsory Deposit Scheme Act, 1963 (Act No. XXI of 1963), which was a law made by Parliament, came into force on June 1, 1963. Section 2 of that Act provided that it shall apply to the categories of persons enumerated in it including persons liable to payment of tax under the Income-tax Act, to whom clause (b) of that section referred. The purpose of the Act was to compel deposits by person by whom additional surcharge was payable in respect of any assessment year, made a deposit under the Act, he would be entitled to a deduction from the additional surcharge of a sum which was either equal to the sum deposited or a certain proportion of his residual in come. The expression 'residual income' was defined by section 2 of the Finance Act, 1963 (Act No. XIII of 1963).

3. We are not concerned with the other parts of section 4, such as, sub-sections (4) and (5) which were applicable to employees and persons liable to pay advance tax, since all the petitioners before us are persons by whom additional surcharge was payable, and so, are governed by sub-section (3).

4. Section 5 authorizes the Central Government to make schemes to be called Compulsory Deposit Schemes in relation to deposits under the Act. The schemes, among other matters, could, as stated in sub-section (2), provide for the rates at which and the period for which compulsory deposits shall be made, the manner of deposit, the specification of authorities for collection and the like. Clause (k) of that sib-section authorised the Central Government to provide in such scheme for any other matter which might be necessary or proper for the effective implementation of the scheme.

5. Section 12 prescribed a penalty for failure to make the deposit, and section 13 for recovery of arrears of deposit and the penalty as an arrear of land revenue.

6. In respect of income-tax payers, the Government of India made a scheme which came into effect on July 1, 1963. This scheme was intituled the Compulsory Deposit (Income-tax Payers) Scheme, 1963, and will be referred to in the course of this order as the scheme. Paragraph 3 of that Scheme specified the deposits to be made. Paragraph 4(1) provided that a person by whom additional surcharge is payable and so fell within section 4(3) of the Act, may make a deposit on or before the close of the year immediately preceding the assessment year for which the deposit has to be made, and, that if he did so, he would earn a deduction from the additional surcharge of the sum mentioned in it.

7. Under the first proviso to that sub-paragraph, the deposit in respect of the assessment year commencing on April 1, 1963, could be made within thirty days of the service of the notice of demand referred to in section 156 of the Income-tax Act, 1961, for that year, or by March 31,1964, whichever date was earlier, For March 31, 1964, specified in this proviso, June 30, 1964, weak later substituted.

8. The assessment year with which we are concerned in these cases commenced on April 1, 1963, and so, the petitioners before us had to make the deposit not later than June 30, 1964, but did not.

9. The assessments in respect of all of them for the relevant assessment year were made only after June 30, 1964, and, since the date prescribed by the first proviso to paragraph 4(1) had by then expired, the petitioners made a request to the Commissioner of Income-tax, after the assessments were completed, for a direction to the concerned Income-tax Officer to receive the compulsory deposits. The Commissioner declined to issue any such direction presumably on the ground that the time for making the deposit had expired.

10. In these writ petitions, the petitioners ask for a direction to the concerned Income-tax Officer to receive the compulsory deposits for the assessment year commencing on April 1, 1963, and to give the petitioners the deduction from the additional surcharge claimable under section 4(3) of the Act.

11. We are also asked to declare paragraph 4(1) of the Scheme as un-constitutional.

12. The argument placed before us is that the clear meaning of section 4(3) of the Act is that the duty to make a deposit under the Act flows from a completed assessment by which the additional surcharge is determined, since the deposit has to be made only by those persons by whom additional surcharge is payable. It was said that no additional surcharge is payable unless the amount of the surcharge payable is determined by an order of assessment, and that the Central Government could not, in consequence, prescribe a date for the deposit which precedes the date of the completion of the assessment. It was also said that section 4(3) of the Act is a self-contained and exhaustive provision in regard to every matter regulating the deposit by a person by whom additional surcharge is payable, including the period within which the deposit has to be made, and that paragraph 4(1) of the Scheme, which prescribes a date for the deposit in transgression of section 4(3) of the Act, is liable to be denounced as unconstitutional.

13. Before discussing the sustainability of this criticism, it would be convenient to discuss the other condemnations made of paragraph 4(1) and the first proviso to that paragraph. It was said that paragraph 4(1), which provides that the deposit by a person by whom additional surcharge is payable should make the deposit before the close of the year immediately preceding the assessment year in respect of which the deposit has to be made, was unmeaning, and that obedience to its requirement was impossible.

14. We should now discuss the argument advanced in this context. According to paragraph 3 of the Scheme, the deposit to be made under it is a certain proportion of there individual income of the dpeositor. The expression 'residual 'income' has, as stated in the Explanation to section 4(3) of the Act, the same meaning as that given to it by section 2(8) of the Finance Act, 1963. That sub-section defines the expression 'residual income' as the amount of the total income from which the amount of the capital gains, if any, and the amount of tax exclusive of additional surcharge which would have been chargeable on such reduced total income, is deducted. It was said that the residual income a fraction of which is the deposit which should be made under the Act, is capable of determination only after the relevant Finance Act is enacted, and that, since the Finance Act would not operate before the close of the year immediately preceding the relevant assessment year to which paragraph 4(1) of the Scheme refers, the duty created under that paragraph to make a deposit before the close of that year was impossible of performance.

15. The other criticism of paragraph 4(1) was that there is a repugnance between that paragraph and section 4(3) of the Act, under which a deposit becomes compulsory only in the case of a person by whom additional surcharge is payable. It was argued that even if the deposit becomes compulsory without the completion of an assessment by which the additional surcharge is determined, paragraph 4(1) brings into being a premature liability to make the deposit. It was contended that since additional surcharge is not payable unless it is charged by the relevant Finance Act and it could not be charged by the relevant Finance Act before the close of the year immediately preceding the assessment year to which paragraph 4(1) of the Scheme refers, no income-tax payer would have acquired by then the status of a person by whom such additional surcharge is payable, and so, could not be compelled to make any deposit. Paragraph 4(1) which imposed a liability not created by the Act, it was said, was beyond the competence of the Central Government.

16. We are of the view that the first proviso to paragraph 4(1) renders the discussion of these submissions unnecessary. That proviso which is a special provision made applicable to the deposit concerning the assessment year commencing on April 1, 1963, with which we are concerned, prescribed a date for the deposit other than the date prescribed by sub-paragraph (1), and so, the difficulty emanating from sub-paragraph (1) does not exist. The deposit in respect of that assessment year had to be made under the first provision within thirty days from the date of service of notice under section 156 of the Income-tax Act, 1961, or by June 30, 1964, whichever was earlier. The arrival of both these days would have been preceded by the commencement of the operation of the Finance Act, 1963, and, in consequence, the computation of the residual income and the estimate of the deposit were both possible. The Compulsory Deposit Scheme Act did not have portion beyond the assessment year with which we are concerned, and so, the difficult predicament which might have arisen during the subsequent assessment years ceases to have relevance. So long as the first proviso removes the difficulty such as might have arisen under sub-paragraph (1), we should desist from discussing the reproach leveled against sub-paragraph (1).

17. But, it was said that the proviso which was applicable to the relevant assessment year depended for its validity upon the validate of sub-paragraph (1) of paragraph 4 to which it was a proviso, and that, in consequence, if sub-paragraph (1) falls to the grounds, the first proviso to it meets with a similar fate. That we are not, there fore, relieved of the duty to discuss the validity of sub- paragraph (1) was the postulate.

18. We do not agree. Although the provision concerning the relevant year is to be found in that part of paragraph 4 which is described as a proviso, we think that it is really not a proviso concerning the deposit to be made in respect of the assessment year to which it relates. For that assessment year, the period within which the deposit had to be made, was specified by the provision which is in the nature of a special provision depending in no manner for its validity upon the validity of the provision relating to the subsequent assessment years.

19. The same would be the position even if it has the status of a proviso so long as it is an independent and severable part of paragraph 4 and regulates a matter which is taken out of the orbit of sub-paragraph (1).

20. We now proceed to discuss the interpretation constructed on the words 'by whom any additional surcharge is payable' occuring in section 4(3) of the Compulsory Deposit Scheme Act, which reads :

'4. Requirement as to Compulsory deposit. - ........

(3) A person falling under clause (b) of section 2 by whom any additional surcharge is payable in respect of any assessment year may make a deposit under this Act in respect of that year and if he does, so, then, he shall, on production of proof before the Income-tax Officer concerned of the fact of such deposit having been made, be entitled to deduction from the additional surcharge of a sum which shall be equal to -

(a) the sum so deposited, or

(b) (i) where his residual income is six thousand rupees, three per cent. of of such residual income, or

(ii) where his residual income exceeds six thousand rupees, three per cent. of the first six thousand rupees of such residual income and two per cent. of the balance thereof,

whichever is less.

Explanation. - In this sub-section 'residual income' has the same meaning as in section 2 of the Finance Act, 1963 ( 13 of 1963)'

21. The word 'payable' occurring in this sub-section has, according to Mr. Srinivasan, the same meaning which it has received under the Income-tax Act. It was said that the word 'payable' in section 2(2) of the Income-tax Act, 1922 (XI of 1922), before that sub-section was amended in the year 1953 and which is also in section 156 of the Income-tax Act, 1961, has been understood by the courts in a particular way, and that the meaning which that word has so received, should be the meaning which we should give to that word in section 4(3) of the Compulsory Deposit Scheme Act.

22. Our attention was drawn to the decision of the High Court of Bombay in COmmissioner of Income-tax v. Mazagaon Dock Co. Ltd., that a person became an assessee as defined by section 2(2) of the Income-tax Act, 1922 (XI of 1922), only after his income was ascertained or assessed under section 23. Section 2(2) of that Act defined an assessee as a person by whom income-tax was payable. Depending on this elucidation and upon the amendment in the year 1953 of the definition contained in that sub-section, we were asked to say that if income-tax is payable only after the ascertainment of the income or its assessment, additional surcharge to which section 4(3) of the Compulsory Deposit Scheme Act refers, similarly becomes payable only after the ascertainment of the income and determination of the additional surcharge.

23. Further sustenance for this contention was sought to be derived from the interpretation placed upon section 29 of the Income-tax Act, 1922(XI of 1922), which corresponds to section 156 of the Income-tax Act 1961 (43 of 1961). On the foundation that these sections authorise a notice of demand when any tax, interest, penalty or fine or the like is payable in consequence of an order of assessment, the argument constructed was that additional surcharge also becomes payable only when an order of assessment is made.

24. So, we were asked to say that the additional surcharge became payable by the petitioners only when their income was ascertained and assessed by the orders of assessment which were made long after June 30, 1964, and, that the refusal on the part of the Commissioner of Income-tax direct the acceptance of the deposit after the assessments were so made, amounted to disobedience to the provisions of section 4(3) of the Act, and to a deprivation of the right to the deduction from the additional surcharge for which it provides.

25. We were also asked to contrast the language of section 4(3) of the Act with that of section 2(b) and sub-sections (4) and (5) of section 4. It was pointed out that whereas section 2(b), which applied the Act to income-tax payers, referred to them as 'persons liable to payment of tax', section 4(4) was made applicable to a person who was in receipt of any income under the head 'salaries' and section 4(5) took within it a person who was 'liable to pay advance tax.' Section 4(3), it was emphasised, did not concern itself with a person 'liable to payment of additional surcharge', but spoke of one 'by whom any additional surcharge is payable.'

26. It was maintained that Parliament did not, there fore, when it enacted section 4(3), include in it a person who was liable to pay additional surcharge but legislated only for those by whom additional surcharge was payable, remembering the meaning which the word 'payable' hand received under the Income-tax Act, 1922.

27. It was also suggested that we should read section 4(3) along with section 2(b), and that we should for the words ' A person falling under clause (b) of section 2' with which section 4(3) opens, substitute the words 'A person liable to payment of tax under the Income-tax Act' who would be the person falling under clause (b) of section 2, and that, when we do so, section 4(3) would read :

'A person liable to payment of tax under the Income-tax Act by whom any additional surcharge is payable in respect of any assessment year, may make a deposit. ......'

28. The explanation made was that if we read the sub-section in that way, nothing would be clearer than the great distinction between a person liable to pay additional surcharge and a person by whom additional surcharge is payable, and that, there fore, what attracts the obligation to make the deposit is not the liability to pay additional surcharge but the arrival of the stage when it becomes payable after its ascertainment through an assessment.

29. The question is whether we should understand the word 'payable' occuring in section 4(3) of the Compulsory Deposit Scheme Act, 1963, as involving the concept that the deposit becomes payable only after the additional surcharge is quantified by an order of assessment. It is a sound rule of construction that we should understand a word in a statute in the context in which it occurs and deduce legislative intent, if there be any ambiguity, from its general scheme and purpose with an endeavour to promote its object. It is also an accepted cannot of construction that a word occurring in more than one part of the same statute should be given the same meaning, and that, likewise, the meaning which a word occurring in one statute has received should also be given to that word when it occurs in another statute subsequently enacted. But it is also equally clear that the same word occurring in more than one part of the same statute may be assigned different meanings, if it be proper to do so having regard to the context in which that word occurs and other relevant factors, and that that rule of construction is for the same reason equally applicable when the same word occurs in more than one statute.

30. That being the true principle, the mechanical adoption of the, interpretation of the word 'payable' in the Income-tax Act for ascertaining its meaning in the Compulsory Deposit Scheme Act may not eliminate error or inaccuracy.

31. In this context, we should not overlook the amendment made to section 2(2) of the Indian Income-tax Act, 1922(XI of 1922), by the Income-tax (Amendment) Act, 1953 (XXV of 1953), by which there was an amplification of the definition of the word 'assessee', obviously for the purpose of overcoming the interpretation placed on the old definition. The altered definition took within it even a person in respect of whom any relevant proceeding under the Act had been commenced. This new definition is now part of the more comprehensive definition contained in section 2(7) of the Income-tax Act, 1961.

32. The enlargement of the definition in this way is what should persuade us to keep aside the interpretation placed by the High Court of Bombay upon the word 'payable' in the old definition, especially since the definition in the Income-tax Act has relevance only to that law and has no utility even in that sphere if there be anything repugnant in the subject or the context.

33. The postulate that no notice of demand could be issued under section 29 of the Income-tax Act, 1922, and under section 156 of the Income-tax, 1961, for the payment of any tax, penalty, interest or fine or the like not determined by an order of assessment, rests manifestly upon the language of the statute which makes that conclusion irresistible.

34. Section 29 of the Income-tax Act, 1922, like section 156 of the Income-tax, 1961, provides for such notice of demand in respect of a tax, penalty, or interest which has become due in consequence of any order passed under or in pursuance of the Act. The words 'due in consequence of any order passed under or in pursuance of this Act' occurring in that section which correspond to the words 'is payable in consequence of any order passed under this Act' occuring in section 156 of the new Act, make no other interpretation possible. Those are the words which insist upon an order passed under the Act before a demand for the payment of the amount could be made.

35. Although there is in section 4(3) of the Compulsory Deposit Scheme Act the word 'payable', the sub-section does not say that the additional surcharge which is so payable should have become payable in consequence of any order under the Income-tax Act. The absence of those words in that sub-section is what makes us doubt that we should read the word 'payable' in that sub-section as it has been understood in the Income-tax Act.

36. There are, in our opinion, weighty reasons for thinking that the duty to make the Compulsory deposit is not postponed until the income is ascertained or assessed. It is clear from section 4(3) that, although that sub-section does not in so many words make a deposit Compulsory, such is the nature of the deposit to which it refers. Mr. Srinviasan did not dispute that it is so. But it does not expressly name the period within which the deposit has to be made.

37. Section 5, according to Mr. Rajasekhara Murthy for the respondents, confides the power to name that period to the Central GOvernment through a scheme, and, we think, that the power to make a scheme for the purpose flows from clauses (b) and (k) of section 5(2). Clause (b) empowers the Central GOvernment to provided for the manner in which and the intervals at which such deposit shall be made and clause (k) authorises the Central Government to make provision for any other matter which may be necessary or proper for the effective implementation of the Scheme. Even on the assumption that clause (b) does not in very clear language authorise the specification of the period within which the deposit should be made, there should be little doubt that since the specification of that period is plainly necessary for the effective implementation of the Scheme, that power is in any event created by clause (k).

38. So, the Central GOvernment did have the power to make a scheme for he specification of that period and paragraph 4 of the Scheme purports to make that specification.

39. But, it was said that the time within which the deposit could be made was prescribed by section 4(3) of the Act and that it no longer became necessary for the Central Government to make a provision in its Scheme in that regard.

40. This submission entirely rested upon the interpretation of the word 'payable'suggested for the petitioners. The argument was that if that word means that the deposit is not payable before the ascertainment or assessment of the income, the necessary implication is that the deposit should be made only after such ascertainment or assessment and not earlier.

41. This interpretation involves a serious infirmity since it does not specify the date within which the deposit has to be made although it would name the date from which the period would commence without naming the date on which it ends.

42. To overcome this difficulty, it was suggested that the deposit becomes payable on the same day on which the tax or addition surcharge becomes payable on an order made under the Income-tax Act.

43. But, to say so would be to read into section 4(3) words which it does not contain, and we think that the exegesis is artificial and inexact. We think that the date on which the additional surcharge has to be paid cannot coincide with the date on which the Compulsory deposit has to be made. The payment of additional surcharge has to be made only after its determination and upon service of the notice of demand. But, when the Compulsory deposit is mad,e the Income-tax Officer should deduct from the additional surcharge charged by the Finance Act the amount deposited or a smaller sum as the case may be. The acceptance of the argument that the determination of the additional surcharge, one by an order of assessment before the deposit, and the other thereafter for making the deduction, and, unless the first is amended by the second, both would have equal efficacy.

44. We should feel reluctant to accept an interpretation which produces the necessity for two such determinations in regard to the same matter. The suggestion that a preliminary determination of the additional surcharge should be made just to produce the obligation for the deposit denuding it of the attribute of enforceability, does not commend itself to us.

45. So, we are of the opinion that the Central Government was clothed with the power to name the period within which the deposit had to be made, and our conclusion receives support from section 12 of the Act, which provides for a penalty for failure to make the deposit ' within the time specified there for.' The suggested interpretation of section 4(3) does not produce the period which could be regarded as a period so prescribed and that specification, in our opinion, had to be made by a scheme and paragraph 4 is the relevant part of the Scheme which specified it.

46. Now, it is seen from section 4(3) that a deposit under it earns for the depositor a deduction from the additional surcharge. What is so earned is a 'deduction' as the sub-section expressly states. The word 'deduction' would be in opposite and inappropriate, if the legislative intent was that the deposit should be made only after the assessment quantifies the additional surcharge. If the legislative intent was that the deposit should follow such quantification and that when it is made it should earn for him a benefit, Parliament could have stated that the additional surcharge shall stand reduced or that if it had been paid, the amount by which it should so stand reduced shall be refunded. The import of the word 'deduction ' appears to us to be that when the Income-tax Officer makes the order of assessment he should substitute in his order a smaller additional surcharge for that charged by the Finance Act, which is possible only if the deposit precedes the assessment.

47. The other view does not fit into the provisions of sections 12 and 13 of the Act, We have observed that section 4(3) does not specify the period within which the deposit could be made, and so, to ascertain that period, we should look into the first proviso to paragraph 4(1) of the Scheme. That is the relevant part of the Scheme into which one should look, for deciding whether a person liable to make a deposit had or has not incurred a penalty under section 12. And, when that is done, it emerges that in all cases where no deposit is made by June 30, 1964, for the assessment year commencing on April 1, 1963, a penalty could be imposed under section 12.

48. The condemnation of paragraph 4(1) of the Scheme would render section 12 unmeaning and rob it of its potency, since nowhere else does the Act specify the time for the deposit to be made.

49. It was, however, said that, although that would be the position arising on the rejection of the contention that section 4(3) itself specifies that period of time, the specification of that period by paragraph 4 of the Scheme has relevance only to the imposition of a penalty and not for the purpose of section 4(3). The argument leads to the incongruity that there would be two periods of time for the deposit and that while the neglect to make the deposit within one such period would entail a punishment under section 12, a deposit within the other period which of course would be longer would earn a reward under section 4(3). The again, while the penalty imposed along with the amount not deposited could be recovered as an arrear of land revenue under section 13, the defaulter could even after the imposition of a penalty or the commencement of such proceedings, make a deposit and claim a deduction in the additional surcharge.

50. It was submitted that there would be no such oddity if we say that section 4(3) fixes only the terminus a quo and that that starting point was the date of the assessment but does not specify the terminus ad quem, and that, in consequence, the deposit could be made at any time thereafter, there being no outer date for such deposit. It was also submitted that a deposit recovered by coercive processes under section 13 was also in effect a deposit within the meaning of section 4(3) earning for the defaulter the deduction provided for it.

51. It appears to us that the solution is both imperfect and incomplete. It is incomplete because it completely defeats section 12. If we say that the deposit could be made at any time, we would be saying that it may not be made at all, if one chooses not to make it. But it is admitted that the deposit is Compulsory and the freedom to postpone the deposit at the depositor's choice is in compationable with the element of compulsion.

52. It is also clear that t6he deduction under section 4(3) is earned only when there is a deposit within the time allowed. Its recovery under section 13 is no such deposit, for such recovery becomes possible only when it is not deposited in time. Their occupation (sic) which overlooks the contrast between a proper deposit which earns a concession and the neglect to make it which entails a punishment, cannot but be imperfect.

53. We should not prefer a construction which produces conflict to that which ensures harmony. Nor should we strain the language of the statute to persuade ourselves that no real conflict ensues. We must place upon the word 'payable ' occurring in section 4(3) a construction which makes sections 12 and 13 equally efficious. We lean to the view that not even the contrast portrayed to us between the language of section 4(3) and that of sections 2(b), 4(4) and 4(5) should transport us to the view that the deposit under section 4(3) can be deferred until the quantification of the additional surcharge by an order of assessment.

54. We should give the language of section 4(3) its ordinary meaning. The word 'payable' as usually understood and as explained in the dictionary had reference to what should or may be paid or to something which person could be made to pay. On the imposition of additional surcharge by the Finance Act, the person on whose income it is charged should pay it, and could be made to pay it, although a demand for its payment should be preceded by an assessment. So understood, he becomes a person by whom it is payable when the Finance Act charges it, and we fell disposed to read the section in that way without feeling hampered by a technical or other meaning which any expression occurring in it may have received in another statute or context.

55. Our leaning to this construction is strongly aided by the occasion and design of the Act whose primary purpose was the argumentation of revenue through the deposit which the Act compels. The Act directs for that purpose the preparation of schemes by the Central Government providing for many matters including the computation of the amount, the manner of its deposit, the period within which it should be made and the like. Among the income-tax payers, those in receipt of salaries or liable to pay advance tax to whom sub-sections (4) and (5) of section 4 respectively refer, could not postpone the deposit until they were assessed. These features of the Act and the insistence of sections 12 and 13 on a deposit ' within the time specified there for' preclude the postulate that a person from whom additional surcharge could be exacted, unlike others, enjoyed freedom from that obligation until there was an assessment which in conceivable cases may involve protraction and delay. And Mr. Srinivasan did not dispute that it was possible for the petitioners to estimate the amount of the deposit without waiting for an assessment.

56. The decision of the Supreme Court in Bharat Kala Bhandar Private Ltd. v. Municipal Committee, Dhamangaon (Civil Appeal No.600 of 1964), on which Mr. Srinivasan depended, cannot be of any assistance to him. That case involved the interpretation of article 276 of the Constitution which fixes the outer limit of the total amount payable by way of taxes on professions, trades, callings and employments, to the state or a local authority. It was urged on behalf of the Municipal Committee, which was the respondent in the tat case, that the ban had no relevance to the charge of the tax but only to its recovery. Adverting to that argument, the Supreme Court observed thus :

'A tax can be recovered only if it is `payable ' and it would be payable only after it is assessed. It is, there fore, futile to contend that the van placed by the aforesaid provisions extends only to recoveries and not to an earlier stage. '

57. Article 276(3) of the Constitution opens with the words ' The total amount payable in respect of any one person to the State or ...' and the context in which the word 'payable' occurs in that part of the Constitution is not similar to that in which it occurs in section 4(3) of the Compulsory Deposit Scheme Act, So, we should not deduce from the observations of the Supreme Court a general enunciation that the word 'payable' in whatever context it occurs has reference to a stage which is reached when there is the assessment of the tax. While section 4(3) is descriptive of the person falling within it, article 276(2) speaks of the amount no more than which is payable. Since over speaks of the person and the other of the amount, both could not be understood in the same way.

58. In the view that we take, the late endeavour made by the petitioners to earn for themselves the deduction claimable under section 4(3) of the Act could not but fail.

59. The reproach of discrimination was what was next levelled against the first proviso to paragraph 4(1) of the Scheme. It was said that those in whose cases an assessment was made would in a conceivable case have a shorter period of time for the deposit than the others whose assessments were not completed, and so, could make the deposit by June 30, 1964.

60. Under the first proviso, the deposit has to be made either within thirty days of the service of notice of demand under section 156 of the Income-tax Act, 1961, or by June 30, 1964, whichever is earlier. So, if the period of thirty days after the service of the notice of demand expired before June 30, 1964, the deposit had to be made earlier than June 30, 1964. But one in whose case the period had not expired or who had not been served with a notice of demand or in whose case the assessment had not been completed, could make the deposit within the longer period which expired on June 30, 1964.

61. It may be so, but the complaint of discrimination cannot properly emanate from the petitioners who were not discriminated against but who, on the contrary, could have made the deposit within the longer period.

62. At one stage during the argument, it was contended by Mr. Rajasekhara Murthy for the respondents that our jurisdiction could not be invoked unless preceded by the resort to the remedy, which, it was stated, was available under section 4(10) of the Act, which provided that, if any doubt or dispute arose as to the amount to be deposited by any person under the Act or as to the date on which such amount is to be deposited, or as to any other matter in relation to any deposit to be made under the Act, the decision thereon of the Central Government or any authority empowered by the Government in this behalf shall be final.

63. On our interpretation of section 4(3), this submission will not survive.

64. We should, however, make it clear that, on the question whether any penalty could still be recovered in cases where no deposit has been made or whether the arrears of deposit could similarly be recovered under section 13, we express no opinion.

65. We dismiss these petitions without making any order as to costs

Ahmed Ali Khan, J.

I agree.

66. Petitions dismissed.


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