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Ved Vyas Chawla Vs. the Income Tax Officer 'C' Ward and Anr. (20.01.1964 - ALLHC) - Court Judgment

LegalCrystal Citation
CourtAllahabad High Court
Decided On
Case NumberCivil Misc. Writ No. 336 of 1964
Reported inAIR1965All37; [1965]57ITR749(All)
ActsConstitution of India - Articles 14, 19(1), 269, 270 and 271; Finance Act, 1963; Compulsory Deposit Scheme Act, 1963
AppellantVed Vyas Chawla
RespondentThe Income Tax Officer 'C' Ward and Anr.
Appellant AdvocateGopal Behari, ;G.N. Dhavan and ;Ajit Dhavan, Advs.
Respondent AdvocateS.C.
DispositionPetition dismissed
constitution - surcharge - articles 14 and 271 of constitution of india - surcharge an additional tax to cope up with varying circumstances - held, parliament is empowered to levy surcharge any number of times - also, exclusion of salaried employees from any particular type of surcharge does not violate article 14. - cantonments act[c.a. no. 41/2006]. section 346 & cantonment fund (servants rules, 1937, rules 13, 14 & 15: [h.l. gokhale, ag. cj, p.v. hardas, naresh h. patil, r.m. borde & r.m. savant, jj] jurisdiction of school tribunal constituted under maharashtra employees of private schools (conditions of service) regulations act, (3 of 1978) held, school run by the cantonment board is a primary school and it is not a school recognised by any such board comparable to the divisional..........that in the same finance act surcharge designated as 'special' and 'additional' could also be levied. parliament in this respect is paramount and the finance acts passed by parliament and, therefore, surcharge whether it takes the shape of 'additional' surcharge' or 'special surcharge' on income cannot be said to be violative of article 271 of the constitution 6. the next question to be considered whether additional surcharge or additional tax which could have been levied under article 271 can be levied only on a particular class and not on the public in general, the argument is that in the finance act of 1963, which is the impugned provision, the salaried class of persons has been excluded from the application of the provisions for the levy of surcharge. the relevant portion of.....

S.C. Manchanda, J.

1. This is a writ petition under Article 226 of the Constitution directed against the levy of additional Surcharge According to the petitioner the additional Surcharge is hit by Articles 14 and 271 of the Constitution of India it is, also, according to him hit by Article 19(l)(g) of the Constitution

2. Elaborating these grounds, Mr Copal Behari referred to Article 271, which contemplates according to him, additional income-tax in the shape of additional surcharge, which can be levied only once and not time and again calling it at one time ''Special Surcharge' and at another 'addtional Surcharge' in the present case, the in come-tax Officer determined the tax payable under Section 210 of the Indian Income-tax Act. 1961 (hereinafter referred to as the Act) for the payment of Rs. (108.64 nP as Income-tax, Rs. 264.32 nP Additional Surcharge, Rs. 50.77 nP Surcharge and Rs. 2.13 Special Surcharge totalling Rs 905.87 Np

3. The first question to be examined, there tore, is whether Surcharge can be levied only once or it can be levied any number of times under Article 371 of the Constitution?

4. The relevant portion of Article 271 reads.

''Notwithstanding anything in Articles 269 and 270 Parliament may at any time increase any of the duties or taxes referred to in those Articles by a surcharge for purposes of the Union ......'

The words 'at any time' are significant. Article 271 undoubtedly gave Parliament the right to levy a surcharge from time to time and merely because Parliament had imposed surcharge in one shape, is not prevented from imposing surcharge in another form to cope with varying circumstances,

5. Article 269, provides for taxes to be levied by Government, inter alia, in respect of Estate Duty and Article 270, inter alia, for the levy or taxes by Government of India on income other than Agricultural income. The surcharge, as provided in Article 271 is nothing but additional tax or duty which Articles 269 and 270 empower Parliament to impose. Article 271, therefore, gave the Parliament power to levy additional tax as it deems fit to be known is 'Surcharge' and not Income-tax. If under Article 271, Parliament can 'at any time' increase the tax already levied, it necessarily follows that in the same Finance Act Surcharge designated as 'Special' and 'additional' could also be levied. Parliament in this respect is paramount and the Finance Acts passed by Parliament and, therefore, surcharge whether it takes the shape of 'additional' surcharge' or 'Special Surcharge' on income cannot be said to be violative of Article 271 of the Constitution

6. The next question to be considered whether Additional Surcharge or additional tax which could have been levied under Article 271 can be levied only on a particular class and not on the public in general, The argument is that in the Finance Act of 1963, which is the impugned provision, the salaried class of persons has been excluded from the application of the provisions for the levy of Surcharge. The relevant portion of Section 2 Sub-clause (2) of the Finance Act 1963, reads;

'(2) in making any assessment for the assessment year commencing on the 1st day of April, 1963. (a) where the total income of an assessee, not being a company, includes any income chargeable under the head 'Salaries', the income-tax payable by the assessee on that part of his total income which consists of such inclusion shall be an amount bearing to the total amount of income-tax payable according to the rates applicable under the operation of the Finance (No. 2) Act, 1962 (20 of 1962), on his total income the same proportion as the amount of such inclusion bears to his total income.'

Therefore, income chargeable under the head 'Salaries' by implication will not be subjected to additional Surcharge which came to be levied under the Finance Act of 1963 under Section 2(a)(i) and (ii) for the first time. It is contended that this classification is discriminatory and violative of Article 14 of the Constitution which provides for equality before the law. Several decisions were relied upon, but it is unnecessary to deal with them as the principles by now are well settled and are summarised by the Supreme Court in The State of Bombay v. F. N. Balsara, AIR 1951 SC 318 as follows:

(1) There is always a presumption in the favour of the constitutionality of an enactment;

(2) The presumption is rebuttable in certain cases

(3) The principle of equality does not mean that every law must have universal application for all persons.

(4) The principle does not take away from the State the power of classifying persons for legitimate purposes.

(5) Every classification is in sorae degree likely to produce some Inequality and mere' production of Inequality is not enough.

(6) if a law deals equally with members of a well-defined class, it is not obnoxious and it is not open to the charge of denial of equal protection on the ground that it has no application to other persons;

(7) While reasonable classification is permissible such classification must be based upon some real and substantial distinction bearing a reasonable and just relation to the object sought to be attained.

7. The principles being well established, the only difficulty that can arise is in their application to the facts of a particular case. In the present case, however, no such difficulty arises as the salaried class of employees, undoubtedly, is a well defined class and has been so treated for decades by the various Finance Acts. The Finance Act of 1963 deals equally with all persons within the salaried class. The classification is also reasonable as it is based upon a real and substantial distinction between salaried employees and others. Salaried employees have always, at least since the Income-tax Act of 1922, been taxed on the basis' of the Finance Act current during the year when the salary is received and not on the basis of the Finance Act enacted after the year has come to a close. This is for the very good reason that salaried employee has to balance his budget, his income from that source being precise, predetermined and limited, it is but fair that he should know what his tax liability is likely to be for the particular year beforehand, so that he can cut his coat according to his cloth. It also enable Revenue to enforce effectively and with certainty the provisions of the Income-tax Act against employees and in the matter of the deduction of tax at source. The charge of discrimination, therefore, cannot legitimately be levied against the Finance Act of 1963 in the matter of 'additional Surcharge' as the classification is neither arbitrary nor capricious; it is a perfectly understandable, intelligible and reasonable classification.

8. Lastly, it was contended that the Compulsory Deposit Scheme Act, 1963 which was, so to speak, in lieu of Additional Surcharge was violative of the principles laid down in Article 19(l)(g) of the Constitution, There is no force a this contention either as the Compulsory Deposit Scheme now applies to those who are subject to additional Surcharge and if an inducement is held out to them to make deposits regularly for which corresponding rebate from additional Surcharge to be given, it cannot per se infringe any Article of the Constitution. The argument is that by such inducement in making the compulsory deposit. Government was discriminating between persons other than salaried employees from carrying on freely their profession, occupation or trade. The Compulsory Deposit Scheme applies to a well defined class and the Finance Act of 1963 cannot be said to place any restriction on the free exercise of any profession, trade or occupation.

9. For the reasons given above this writpetition is without merit and is dismissed inlimine.

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