K SRINIVASAN A V THOMAS AND CO Vs. COMMISSIONER OF INCOME-TAX KERALA ERNAKULAM
HIGH COURT OF KERALA
K.SRINIVASAN, A.V. THOMAS AND CO. LTD., ALLEPPEY
COMMISSIONER OF INCOME-TAX, KERALA, ERNAKULAM
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(1.) This is a reference made by the Madras Bench of the Income Appellate Tribunal under S.256(1) of the Income Tax Act, 1961 on the application of the assessee. The question referred is:
"Whether the words "income tax" in the Finance Act, 1964 in Sub-s.2(a) and Sub-s.2(b) of S.2 of the Finance Act 1964 would include surcharge and additional surcharge -
This is a novel and interesting question; and its decision depends merely on the correct interpretation of the relevant statutory provisions.
(2.) This question has arisen out of an assessment for the year 1964-65. The assessee is an individual; and his total income was assessed at Rs. 45,173 This was made up of Rs. 42,635 under the head salary and Rs. 2,535/- under the head other sources. This total income was charged to income tax, supertax and surcharges at the rates provided in the Finance Act, 1964. Sub-s.(2) of S.2 of this Act provides that when the total income of an assesses not being a company includes any income chargeable under the head salaries, income tax and supertax payable by the assessee on the salary portion of the total income shall be the proportionate amount payable according to the rates provided in the Finance Act 1963. Under the Finance Act 1963, income tax shall be increased by a surcharge, special surcharge and additional surcharge, while supertax shall be increased by a surcharge and special surcharge in the manner provided in the said Act. But Sub-s.(2) of S.2 of the Finance Act, 1964 did not mention any of these surcharges. Therefore, the assessee contended that the salary portion of his total income was chargeable only to income tax and supertax, and not to any of the surcharges. The Appellate Tribunal rejected this contention, holding that income tax and supertax include the surcharges, and that the assessee was liable also to pay the surcharges as provided in the Finance Act 1963, even though they were not specifically mentioned in Sub-s.(2) of S.2 of the Finance Act, 1964.
(3.) The learned counsel for the assessee contended before us that, according to the scheme of the Income Tax Act and the relevant Finance Acts, income tax and supertax do not include the surcharges, and that the surcharge is a separate charge, and it is a tax in addition to the income tax and supertax. He first referred to the charging sections in the Income Tax Act. S.4 charges income tax and it reads as follows:-
"4. Charge of income tax.-- (1) Where any Central Act enacts that income tax shall be charged for any assessment year at any rate or, rates, income tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Acs in respect of the total income of the previous year or previous years, as the case may be, of every person:
Provided that where by virtue of any provision of this Act income tax is to be charged in respect of the income of a period other than the previous year, income tax shall be charged accordingly.
(2) In respect of income chargeable under sub-s.(1), income tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act."
S.95 charges supertax; and it reads:
"95. Charge of supertax.-- (1) In addition to the income tax charged for any assessment year, and save as otherwise provided in this Act, there shall be charged for that assessment year in respect of the total income of the previous year or previous years, as the case may be, of every person,- not being a registered firm, an additional duty of income tax (in this Act referred to as supertax) at the rate or rates laid down for that assessment year by any Central Act:
Provided that, where by virtue of any provision of this Act supertax is to be charged in respect of the income of a period other than the previous year, supertax shall be charged accordingly.
(2) In respect of income chargeable under sub-s.(1), supertax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act.
(3) In the case of a registered firm, or an unregistered firm, which has been assessed in the manner applicable to a registered firm under the provisions of clause (b) of S.183, supertax shall be payable by each partner of the firm individually on his share in the income of the firm and not by the firm itself."
Income Tax and supertax are both taxes on income; and supertax is a tax on income in addition to the income tax. Yet they are called by different nomenclatures and treated as separate taxes under the Income Tax Act.;
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