- (1.) The appellant filed a writ petition in the High Court of Madras under Article 226 of the Constitution to challenge an assessment order dated August 22, 1963 made by the respondent levying additional surcharge on its residual income. The High Court dismissed the writ petition by its judgment dated October 15, 1968 but it has granted to the appellant a certificate to file an appeal to this Court under Article 133 (1) (a) and (c) of the Constitution.
(2.) The appellant is a co-operative society engaged in the business of banking. Its total income for the assessment year 1963-64 was computed by the respondent at Rupees 10,00,098. Out of this, Rs. 9.48.335 was its business income while Rupees 51.763 was its income from other sources. Since, under Section 81 (i) (a)of the Income-tax Act, 1961 a cooperative society engaged in the business of banking is not liable to pay lncome-tax on its business income, the tax amounting to Rs. 23,845.47 was charged on Rs.51,763 only though for the purposes of rate the income was taken at Rs. 9,48.335 in view of Section 110 of the Act Applying the Finance Act, XIII of 1963, the respondent computed the residual income of the appellant at Rs. 5,39,386 and levied on it an additional surcharge of Rs 52,828.60. Thus the total tax levied on the appellant came to Rs.23845.47 plus Rs.52,828.60 ie.Rs.76.674.07.
(3.) The main grievance of the appellant before the High Court was that where its taxable income was only Rs.51,763, a tax of Rs, 76,674.07 was imposed on it. The relevant provisions of the Finance Act were accordingly said to be invalid as they could not subject to additional surcharge an income which was exempt from tax under the provisions of the Incometax Act. The additional surcharge, it was contended, was intended as an additional levy on the income-tax and had no independent existence apart from it. These contentions were rejected by the High Court and hence this appeal.;