Skip to content


B.M. Amina Umma Vs. Income-tax Officer, Kozhikode - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberWrit Petn. Nos. 726 and 867 of 1953
Judge
Reported inAIR1954Mad1120; [1954]26ITR137(Mad)
ActsGovernment of India Act, 1935 - Sections 1 and 100; Income Tax Act, 1922 - Sections 16 and 16(3); Constitution of India - Articles 14 and 19(1); Code of Civil Procedure (CPC) , 1908
AppellantB.M. Amina Umma
Respondentincome-tax Officer, Kozhikode
Appellant AdvocateK. Rajah Aiyar, ;B. Pocker and ;G. Maheswaran, Advs.
Respondent AdvocateC.S. Rama Rao Sahib, Adv.
DispositionPetition dismissed
Cases ReferredHeiner v. Donnan
Excerpt:
direct taxation - assessment proceedings - applications for issue of writs of prohibition directing income-tax officer to desist from continuing assessment proceedings against petitioner - petitioner challenged validity of proceedings before income-tax officer on ground that section 16 (3) ultra vires the central legislature - income of minor included in income of minor child's parent provided other requirements of section 16 (3) (a) (ii) satisfied - section 16 (3) (a) (ii) provides only for tax on income - it does not cease to be a tax on income either in form or in substance though it provides for incidence of tax not on person whose income assessed to tax but on another - section 16 (3) (a) (ii) well within legislative power conferred on central legislature. - rajagopalan, j.1. these are applications under article 226 of the constitution for issue of writs of prohibition directing the income-tax officer to desist from continuing the assessment proceedings against the petitioner under the income-tax act for the assessment years 1952-53 and 1953-54.2. the petitioner is the widow of haji k. m. ahmed kutty. he had a 12 annas share in the partnership which consisted of himself and one abdulla. ahmed kutty died on 5-7-1950. his heirs were his two wives, three minor children by the first wife (the petitioner) and two minor children by the second wife. the partnership was reconstituted on 25-12-1950 with three partners, the petitioner, abdulla and khader kutti, a brother of the petitioner. the three minor children of the petitioner were admitted to the.....
Judgment:

Rajagopalan, J.

1. These are applications under Article 226 of the Constitution for issue of writs of prohibition directing the Income-tax Officer to desist from continuing the assessment proceedings against the petitioner under the Income-tax Act for the assessment years 1952-53 and 1953-54.

2. The petitioner is the widow of Haji K. M. Ahmed Kutty. He had a 12 annas share in the partnership which consisted of himself and one Abdulla. Ahmed Kutty died on 5-7-1950. His heirs were his two wives, three minor children by the first wife (the petitioner) and two minor children by the second wife. The partnership was reconstituted on 25-12-1950 with three partners, the petitioner, Abdulla and Khader Kutti, a brother of the petitioner. The three minor children of the petitioner were admitted to the benefits of that partnership with a total of 8 annas share between them. The petitioner was entitled to a four annas share. This partnership also was registered under Section 26-A, Income-tax Act.

After determining the income of the firm for the assessment year 1952-53, and after apportioning it between the sharers under Section 23(5), Income-tax Act, the Income-tax Officer assessed the petitioner to tax on her income and also that of her three minor children under the provisions of Section 16(3) (a) (ii), Income-tax Act. It was on the same basis that he proposed to assess the petitioner for the assessment year 1953-54 also but that assessment had not been completed when the petitioner filed these petitions in this Court for the issue of writs of prohibition. The petitioner challenged the validity of the proceedings before the Income-tax Officer on the ground, that Section 16(3), Income-tax Act was 'ultra vires' the Central Legislature.

3. Section 16(3) (a) (ii), Income-tax Act, which was inserted by the Amending Act IV of 1937 runs:

'In computing the total income of any Individual for the purpose of assessment there shall be included so much of the income of a wife or minor child of such Individual as arises directly or indirectly from the admission of the minor to the benefits of partnership in a firm of which such individual is a partner.'

4. The validity of this section (hereinafter, referred to as the impugned provision) was challenged on the following grounds: (1) It was beyond the legislative powers of the Central Legislature conferred on it by entry 54 of List 1 of the Seventh Schedule of the Government of India Act, 1935. (2) Even if the provision was 'intra vires' when enacted in 1937, it. offended the fundamental rights guaranteed under Articles 14 and 19(1)(g) of the Constitution and was, therefore, unenforceable against the petitioner in the relevant assessment years.

5. Though the petitioner challenged the validity of the whole of Section 16(3), Income-tax Act, It Is only the validity of the second sub-clause of Section 16(3) (a) that directly arises for determination in the proceedings before us. That question of legislative competence will have to be determined primarily, on the basis of the language of the Government of India Act, Entry 54, List 1 read with Section 100, Government of India Act. Section 100(1) ran;

'Notwithstanding anything in the two succeeding sub-sections, a federal legislature has and a provincial legislature has not power to make laws with respect to any of the matters enumerated in list 1 in the Seventh Schedule to this Act (hereinafter called the Federal Legislative List).'

Entry 54 of that list ran;

'Taxes on income other than agricultural income.'

That entry is identical with item 82 in list I of the seventh schedule to the Constitution of India.

6. Section 16(3) (a) (ii), Income-tax Act authorises the inclusion in the income of an individual for the purposes of assessment so much of the income of his or her minor child as arises directly or indirectly from the admission of that minor child to the benefit of partnership in a firm of which such individual is a partner. It is only the Income that is assessed. Section 16(3) (a) recognises that the Income is that of the minor child that is, it recognises the legal right of the minor child to that income. For a limited purpose of assessment of that income to income-tax that income of the minor is included in the income of the minor child's parent, provided the other requirements of Section 16(3) (a) (ii), Income-tax Act are satisfied.

7. The contention of Sri. Rajah Aiyar, the learned counsel for the petitioner was that entry 54 in the Federal Legislative list of the Government of India Act, 1935, did not confer on the legislature any legislative power to tax A on the income of B that is in this case to tax the petitioner on the income of her minor children. Acceptance of that contention means that entry 54 would have to be read or at least interpreted as 'a tax on income of the person assessed to the tax.' Does entry 54 read with Section 100, Government of India Act, 1935 necessarily carry with it such a limitation is the question for determination. It was a rule of construction repeatedly laid down by Courts in India and in England that Chagla C. J. restated when he observed in --'J.N. Duggan v. Income-tax Commr., Bombay City' : [1952]21ITR458(Bom) .

'It is well settled by now that a large and liberal interpretation must be placed upon all entries in the Seventh schedule of the Government of India Act and that the widest import and significance must be given to the language used by Parliament in these various entries, it must not be forgotten that' the legislature created by the. Government of India Act was a sovereign legislature within its own sphere and that when a topic was assigned to a particular legislature in respect of which it could legislate, then all possible powers with regard to that topic must be attributed to that legislature.'

It is equally well settled that if legislative practice is to be invoked to aid the construction of any statutory provision of the Government of India Act, 1935, it is the legislative practice of the Parliament of the United Kingdom that is relevant.

8. Before we discuss this question further we shall refer to the cases cited before us on this aspect of the case.

9. Sri Rajah Aiyar relied very strongly on the passage in -- 'Hoeper v. Tax Commission', (1931) 76 Law Ed 248 (B) at p.- 252:

'We have no doubt that, because of the fundamental conceptions which underlie our system any attempt by a State to measure the tax on one person's property or income by reference to the property or income of another is contrary to due process of law as guaranteed by the Fourteenth Amendment. That which is not in fact the tax payer's income cannot be made such by calling it Income.'

In Weaver on Constitutional Law at p. 531, the learned author observed:

'An income-tax is one based directly on one's income, emoluments and profits, gross or net, or upon a person in accordance with his income, emoluments or profits.' At p. 532 the learned author observed: 'The word 'income' has been given a variety of meanings in the different statutes. In general it means the true increase in the amount of wealth which comes to a person during a stated period of time..... It is based on the conception that additional property has come to the tax-payer out of the Government. It-imports an actual gain and increase of wealth in hand.'

10. Quite apart from the question whether the principles that underlie the American legislation on Income-tax can decide the question at issue before us, the legislative competence of the Central Legislature (in India), it should be clear that the invalidity of the Wisconsin statute was rested in -- '(1931) 76 Law Ed 248 (B)' not on total absence of legislative powers but on the ground that in exercising that power of legislation, the legislature transgressed the constitutional limits of due process and equal protection of taws guaranteed by the American Constitution. Neither of these limitations was imposed on the Indian Legislature by the Government of India Act of 1935.

We shall consider later whether the impugned statutory provision offends any of the provislons-of our Constitution. '(1931) 76 Law Ed 248 (B)' may not be of any direct assistance in deciding the limits of legislative authority conferred on the Indian Legislature by entry 54 9f the Federal Legislative List read with Section 100, Government of India Act. The Wisconsin legislature could exercise sovereign authority which the Indian Legislature could not claim to the same extent; only the exercise of that sovereign power by the Wisconsin legislature was subjected to the constitutional safeguards prescribed by the Constitution of that State and by the Constitution of the United States.

11. In -- 'United States v. Baltimore and Ohio Railroad Co.', (1872) 21 Law Ed 597 (C), the Court observed:

'A tax is understood to be a charge, a pecuniary burden, for the support of Government. Of all burdens Imposed upon mankind that of grinding taxation is the most cruel. It is not taxation that Government should take from one the profits and gains of another. That is taxation which compels one to pay for the support of the Government from his own gains and of his own property.'

These remarks again have to be understood in the context of the questions at issue in that case, which was made clear by a later passage at the same page:

'There is no dispute about the general rules of law applicable to this subject. The power of taxation by the Federal Government upon the subjects and in the manner prescribed by the Act we are considering, is undoubted. There are, however, certain departments which are excepted from the general power.'

And the Court pointed out that the Congress had not the power by the Internal Revenue Laws, to tax property belonging to the States or to municipal corporations. The learned Judge continued:

'The right of the States to administer their own affairs through their legislative, executive and judicial departments, in their own manner through their own agencies, is conceded by the uniform decisions of this Court and by the practice of the Federal Government from its organisation. This carries with it an exemption of these agencies and instruments, from the taxing power of the Federal Government.'

The decision of the Court in that case was that the tax on interest bonds imposed by the 122nd section of the Internal Revenue Act of 1864, as amended by that of 1886, was a tax upon the income of the creditor or stock-holder, and not a tax upon the corporation, and further that the Congress did not intend, by the Internal Revenue Laws, to tax the property belonging to the States or to municipal corporations. No more than --. '(1931) 76 Law Ed 248 (B)' can this be of any direct assistance to us in deciding the question of the ambit of the legislative power conferred on the Indian legislature by entry 54 read with Section 100, Government of India Act, 1835.

12. In -- 'Williams v. Singer; Pool v. Royal Exchange Assurance', 1921 1 AC 65 (D) the provisions to be interpreted were those of a statute of the Parliament of the United Kingdom whose sovereignty in the legislative field recognised no constitutional limits. Therefore that case again may not be an authority for the position which the learned counsel for the petitioner sought to substantiate.

13. The next case to which our attention was drawn by Sri Rajah Aiyar was -- 'The PatialaState Bank, In re', : AIR1941Bom93 (E). Atp. 94, after pointing out that the Ruler of thePatiala State could not be regarded as a 'person'within the British India, Beaumont C. J. observed:

'I think that, properly considered, income-taxis a tax on a person in relation to his income.The tax is not imposed on Income generally;it is imposed on the income of a person,natural or artificial as defined in Section 3. Theassessment has to be made against a person,and the tax has to be collected from theassessee. The tax la hot made a charge on the income upon which it is levied, and I think, broadly speaking, it is accurate to say that income-tax is a tax imposed upon a person inrelation to his income.'

It was with reference to Section 65, Government of India Act, 1919, that the validity of the provision impugned in that case had to be decided. The relevant portion of Section 65 ran:

'The Indian legislature has power to make laws for all persons, for all Courts and for all places and things within British India,' After discussing the true nature of the Income-tax, Beaumont C. J. upheld the validity of the legislation in that case. He observed: 'But in my opinion that does not mean that legislation as to income-tax can never be regarded as legislation as to a thing in British India within the meaning of Section 65, Government of India Act. In my opinion, a tax on income accruing or arising or received in British India by a person resident outside British India, Is legislation relating to something i.e., certain income, in British India, and therefore to my mind, it falls within the very wide and general words of Section 65. In my judgment, therefore, Act 3 of 1926 is 'intra vires' the Government of India.'

The learned Chief Justice thus made it clear that the ambit of legislative authority conferred by the Government of India Act, 1919, was not limited by the fact that the Income-tax was not a tax on a person resident in British India. Though the wording of Section 65, Government of India Act, 1916 is certainly not the same as that of Section 100, Government of India Act, 1S35, with which entry 54 of List I has to be read, we are unable to see anything in entry 54 itself to limit the legislative field not merely to tax on persons but further to limit the scope to tax onJy on the income of the person assessed.

14. In ' : [1952]21ITR458(Bom) ', Chagla C. J., observed at p. 263:

'There is one further distinction between entry 54 and entry 55 to which attention may be drawn. Entry 54 does not indicate whose income may be taxed by the Central Legislature; no limitation is placed upon the power of the Legislature as to the person who should be taxed in' respect of his income.'

We respectfully agree with that view of the scope of entry 54.

15. How wide was the scope of the legislative power in relation to the income-tax was indicated by the Supreme Court in the decision, -- 'Commr. of Income-tax, Bombay City v. Bhogllal Laherchand' : [1954]25ITR50(SC) .

'The term 'deemed' brings within the net need of chargeability income not actually accruing but which is supposed notionally to have accrued. It Involves a number of concepts. By statutory fiction income which can in no sense be said to accrue at all may be considered as so accruing. Similarly the fiction may relate to the place, the person or be in respect of the year of taxability.'

When such is the content of legislative power, we are unable to hold that the legislature had no power to enact the impugned provision to lay a tax liability on the minor child's income on the parent.

16. In -- 'Commr. of Excess Profits Tax, Madras v. Jivaraj Topun and Sons' : [1951]20ITR143(Mad) , the learned Judges quoted with approval a passage from the judgment of Viscount Finlay in -- 'John Smith and Son v. Moore', 1921-12 tax Cas 286 (H):

'But though for this purpose the business is treated as continuous, the essential incidence of the tax is upon the person by whom it is conducted at the time in question. Just as a rate is imposed upon the occupant in respect of the house, so income-tax and super tax are imposed upon individuals in respect of the business. The yield of the business during any particular period depends upon the amount of profit which is got from it by the person carrying it on for the time being, and this must largely depend upon his personal qualities. The profits are not earned by the business, they are earned by the person who carried it on.'

This passage brings out in sharp relief the basis of taxation and the incidence of the tax.

17. The incidence of the tax whether it is the immediate and apparent incidence, or whether it is the ultimate or real economic incidence, does not, in our opinion, limit the taxing power given to the Central Legislature by entry 54 of list 1. All that entry 54 requires is that the tax must be a tax on Income other than agricultural income. The impugned provision in Section 16(3) (a) (ii), Income-tax Act provides only for a tax on income. It does not cease to be a tax on income either in form or in substance, though it provides for the incidence of the tax not on the person whose income is assessed to tax, but on another. In this case that incidence of the tax on the minor child's income falls under the statute on a parent of that minor.

18. The learned counsel for the petitioner urged that such a provision is opposed to the true concept of income-tax which is essentially a tax on the income of the person assessed. We are unable to accept this contention. Prof. Willis in his Constitutional Law observes at pages 693-694:

'These cases, however, do not make the income-tax a personal tax, because they can be levied on persons because of citizenship or nationality, though they are not domiciled within a country. It has been suggested, therefore, that an income-tax is 'sui Juris' and should be put in a separate class as a composite tax...... In interpreting the sixteenth Amendment the Supreme Court seemed to take the position that an income-tax has now been made an Indirect tax and an excise tax.'

There is therefore nothing in the fundamental concepts of income-tax even as understood in America to prevent the imposition of the immediate and apparent incidence of the tax on a person other than the person whose income is to be assessed.

19. Such a concept is well recognised by the legislative practice in the United Kingdom, the most familiar Instance being the liability Imposed by the Income-tax laws of England on the husband for the tax payable on the income of his wife living with him. It is not necessary to consider in detail now the evolution of the rights of married women in England. Our investigation is quite limited in its scope.

Under the English income-tax law, the income assessed is that of the wife, but the incidence falls upon the husband under certain circumstances, the main requirements being that the husband and wife live together. As we have already pointed out, such statutory incidence in addition to being consistent with legislative practice in England is also not inconsistent with any of the fundamental concepts of income-tax law either as understood in America or in England.

(20) In our opinion, Section 16(3) (a) (ii), Income-tax Act was well within the legislative power conferred on the Central Government Legislature by entry 54 read with Section 100, Government of India Act. 1935. It is not even necessary to have recourse to the enlarging provision of Section 100 'with respect to any of the matters enumerated in list 1' to reach this conclusion. As we have pointed out, what the impugned provision taxes is income, the income of the minor.

21. The next question is whether the impugned provision contravenes any of the fundamental rights guaranteed by our Constitution. It is well settled that taxing legislation is also controlled by the fundamental rights guaranteed in part III of the Constitution.

22. The contention of the learned counsel for the petitioner that the impugned provision offends Article 19(1)(g) of the Constitution, is easiest disposed of. What Article 19(1)(g) provides for is the right of a citizen 'to practice any profession or to carry on any occupation, trade or business.' The impugned provision does not in any way prohibit or even interfere with the right of either the petitioner or the minor to practice any profession or to carry on any occupation trade or business. What the impugned provision has done is to tax the income of the partnership business which the petitioner is left free to carry on and to the benefits of which partnership the minors are entitled. These rights are in no way affected by the taxing statute.

23. The further question is whether the impugned provision contravenes the equal protection of the laws guaranteed by Article 14 of the Constitution. It is true the incidence of the tax under the impugned provision does not fall alike on all parents having minor children. The defence to the charge of denial of equal protection of the law is reasonable classification. Whether that test has been satisfied by the Impugned provision is the real question for determination. That test was restated by the Supreme Court in -- 'State of Bombay v. P. N. Balasara', AIR 1951 SC 318 (I)

'The principle (of equal protection) does not take away from the State the power of classifying persons for legitimate purposes. 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 and the classification cannot be made arbitrarily and without substantial basis.'

Prof. Willis observes at pages 687-588 of his Constitutional Law:

'The Supreme Court permits a wider discretion in classification under the power of taxation, if possible, than it does under the police power. One reason for this undoubtedly is the urgent need for revenue by the various governmental agencies. A State does not have to tax everything in order to 'tax something. It is allowed to pick and choose districts, objects, persons, methods, and even rates for taxation if it does so reasonably.

The constitution does not say how cases shall be decided. All it says is that the States shall not deny to any person within their Jurisdiction the equal protection of the laws. It does not say when persons are within the jurisdiction of a State, nor what are equal laws. As a con-sequence the Supreme Court decides cases as it thinks they ought to be decided with no other mandate than one to decide. The Supreme Court has been practical and has permitted a very wide latitude in classification for taxation.'

At page 593 the learned author observed:

'A frequent classification for taxation is a personal classification. Persons may be put in different classes and some persons taxed and others not taxed. If there is a reason for taxing those put in any class, and if those within the class are treated alike, there is no violation of the equality clause.'

These principles can well govern the interpretation of Article 14 of our Constitution by our Courts.

24. To the discussion of the case law on the subject in -- 'Syed Mohamed and Co. v. State of Madras' : AIR1953Mad105 there is little that we need add at this stage.

25. What is the classification which underlies the impugned provision has to be considered before we apply the test whether such classification has been based upon some real and substantial distinction bearing a reasonable and just relation to the object sought to be attained by the Impugned provision. As we pointed out before it is only a limited class of persons that come within the purview of Section 16(3)(a)(ii), Income-tax Act. It is only a parent who is himself or herself a partner in. a firm to the benefits of which partnership that individual's minor child is admitted, that is taxed.

The income of the adult children of such an Individual cannot obviously fall within the purview. of the Impugned provision; there can be no question of admitting such adult children to the benefits of the partnership as minor children. The Income of the minor children admitted to the benefits of the partnership of which neither parent is a partner also falls outside the purview of Section 16(3)(a)(ii).

26. Is this classification based upon some real and substantial distinction bearing a reasonable and just relation to the objects sought to be attained by Act 4 of 1937, which incorporated the Impugned provision in the Indian Income-tax Act is the next question, Act 4 of 1937 was to give effect to the recommendations of the Income-tax Enquiry Commissioners, 1936, which were accepted by the Government and the Legislature. That has been extracted at page 6S9 of Sri A. C. Sampath Aiyangar's Indian Income-tax Act, Volume II, 4th Edn.:

'There is a growing and serious tendency to avoid taxation by the admission of minor children to the benefits of partnership in the father's business. Moreover, the admission is, as a rule, merely nominal, but being supported by entries in the firm's books, the income-tax officer is rarely in a position to prove that the alleged participation in the benefits of the partnership Is unreal.

There is the genuine case which is intended to be relieved by the Income-tax (Second Amendment) Act, 1933, and the question arises as to the nature and extent of the restriction, which will exclude, from relief only the case in which a father is attempting to obtain an allowance for what is, in effect, merely the cost oil maintenance of his children.

We suggest that the income of a minor should be deemed to be the income of the father (1) if It arises from the benefits of the partnership in a business in which the father is a partner or (2) if, being the income of a minor other than a married daughter, it is derived from assets transferred directly or indirectly to the minor by his or her father or mother, and (3) if it is derived from assets apportioned to him in the partition of a Hindu undivided family.'

27. Much the same was said in the statement of objects and reasons, which it is permissible for a Court to look into to find out what is objective of any given statute passed by the legislature.

28. In effect the statutory provision as it was finally enacted in Section 16(3)(a)(ii) went even a little beyond what was the declared objective in the statement of objects and reasons. But that does not affect the question, was the classification which underlay the impugned provision reasonable? What the income-tax Enquiry Commissioners wanted to provide for was a case where the assets are apportioned in a partition of a Hindu undivided family, which is not quite that of a partition effected among the heirs of a Mohammedan. But as pointed out by Rottschaefer in his Constitutional Law at page 667:

'It is generally held that an issue under the . equal protection clause must be decided in respect of the general classification rather than by the chance incidence of the tax upon particular tax-payers. A classification that is In general reasonable does not become invalid as applied to a particular class merely because it might effect an unreasonable result therein.'

That was also the view adopted in -- '(1931) 78 Law Ed 248 (B)', based upon the earlier decision in -- 'Purity Extract and Tonic Co. v. Lynch', (1912) 57 Law Ed 184 (K):

'.....Where a legislature...... makes a classification reasonable in Itself, its power so to do is not to be denied simply because some innocent article comes within the proscribed class.'

That the incidence of the taxation provided for by the impugned provision falls in the case before us on the petitioner to whom the minor children owe nothing is not therefore by itself enough to rule out the classification as unreasonable or as having no reasonable and just relation to the object of the Amending Act 4 of 1937.

29. As pointed out by Holmes J. in -- '(1931) 76 Law Ed 348 (B)' no doubt in a dissenting Judgment;

'Taxation may consider not only command over but actual enjoyment of the property taxed.'

That was a proposition of law well accepted in America. If the basis of the classification under which the parent became liable for the tax on his minor child's income out of the firm of which he was a partner and to the benefits of which partnership the minor child was admitted was either command or actual enjoyment of the property of the minor as capital of that firm, it is difficult to hold that such a classification is unreasonable, all the more so when what the impugned provision was designed to get at was evasion of tax liability though the capital of the business, income of which business was taxed was in reality contributed by the parent himself.

30. The contention of the learned counsel for the petitioner was that the classification in this case was not reasonable but arbitrary and that contention he sought to support by the observations in -- '(1931) 76 Law Ed 248 (B)' and also on the observations In -- 'Schlasinger v. Wisconsin', (1926) 70 Law Ed 557 (L) and -- 'Heiner v. Donnan', (1932) 78 Law Ed 772 (M). '(1926) 70 Law Ed 537 (L)' was referred to in -- '(1931) 76 Law Ed 248 (B)' and both were referred to in -- '(1932) 76 Law Ed 772 (M)'. We think it is enough if we examine the scope of the decision in -- '(1931) 76 Law Ed 248 (B)'.

What was held in -- '(1931) 76 Law Ed 248 '(B)' was that a husband cannot consistently with the due process and the equal protection clauses of the Fourteenth Amendment be taxed by a State on the combined total of his and his wife's incomes as shown by separate returns where her Income is her separate property and by reason of the tax being graduated, Its amount exceeded the sum of the taxes which would have been due had their separate incomes been separately assessed. Roberts J. who delivered the judgment of the Court pointed out at some length the position of a married woman and her rights in Wisconsin State after which he observed:

'We have no doubt that, because of the fundamental conceptions which underlie our system, any attempt by a State to measure the tax on one person's property or Income by reference to the property or income of another is contrary to due process of law as guaranteed by the 14th Amendment.'

It is not on the basis of any violation of due process of law or the violation of equal protection of law that the question at issue has to be considered. But it must be remembered that the decision in -- '(1931) 76 Law Ed 248 (B)' was that the Impugned Act also violated the equal protection of laws clause.

31. As we understand, the decision in --'(1931) 76 Law Ed 248 (B)' that Court did not Intend to lay down as a proposition of law universal in its scope and applicable at all times under all circumstances and to all States even within the United States that under no circumstance could a husband be taxed on the wife's income. Nor can that decision be treated as authority for universal application that under no circumstance could any State in America tax A on the income of B. The reasonableness or otherwise of a classification has to be decided with reference to all the circumstances of the case including the social and economic structure prevalent in the area where the taxing statute is In operation.

Once again we have to refer to the declared objects of Act 4 of 1937 which were (1) to prevent a parent screening his own real income by the expedient of transferring legal title to it to his minor child and (2) to tax where the pre-existing ownership became distinct ownership on partition in a Hindu undivided family. An attempt to prevent by legislation an evasion of Just tax liability and the necessary classification to give effect to that object cannot, in our view, be termed unreasonable. Judged either by the circumstances in our country that prevailed when the Amending Act 4 of 1937 was passed or by the circumstances that continue to prevail even now, we are unable to hold that the classification is either unreasonable or that it had no Just and reasonable relation to the object of the Act. The case before us cannot be disposed of merely as an attempt to take one person's property to discharge another person's liability. We are unable to see any real justification to extend the principles laid down in -- '(1931) 76 Law Ed 248 (B)' to the case before us and to hold that though in effect, that is, in the immediate incidence, the petitioner is made liable for the tax on the Income of her minor child, the classification of such persons for purposes of taxation is unreasonable and violates Article 14 of our Constitution. It cannot, of course, be gainsaid that within the class that falls within the purview of Section 16 (3) (a) (ii) there is no inequality in the operation of the taxing provision. The classification being reasonable, there is no denial of equal protection of the laws within the meaning of Article 14 of our Constitution.

32. These petitions fail and are dismissed with costs in one W. P. No. 867 of 1953. Counsel's fee Rs. 250.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //