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1961 (3) TMI 8 - SC - Income TaxLegality of the imposition of surcharge imposed on the income of the assessees under the Finance Acts of 1942 1943 1944 and 1945 challenged Held that - the definition in the General Clauses Act the term Central Government did not only denote the Governor-General or the Governor-General in Council as the case may be but also included for certain purposes the Provincial Governments acting within the scope of the authority given to them under section 124(1) of the Government of India Act 1935. This argument in our opinion is wholly fallacious. Under section 124(4) of the Government of India Act 1935 where powers and duties are conferred by section 124 upon a Province or a Federated State there shall be paid by the Federation to the Province or the Federated State such sum as may be agreed. Hence by the definitions given in the General Clauses Act no different concept of the words purposes of the Central Government was intended from what was intended by the use of the words Federal purposes in section 138(1)(b) of the Government of India Act 1935. Appeal dismissed.
Issues:
Challenge to legality of surcharge imposed on income under Finance Acts of 1942, 1943, 1944, and 1945 by Federal Legislature. Analysis: The judgment pertains to sixteen petitions challenging the imposition of surcharge on income under Finance Acts of 1942 to 1945. The petitioners, partners of a firm, disclosed additional income under a voluntary scheme in 1955, leading to reassessment in 1959. The surcharge in question was Rs. 3,82,791, contested as beyond the Federal Legislature's authority. The crux of the matter was the interpretation of the Government of India Act, 1935, specifically section 138(1)(b), granting the Federal Legislature the power to increase taxes by a surcharge for Federal purposes. The petitioners argued that the surcharge levied "for the purposes of the Central Government" exceeded the Federal Legislature's authority. The court analyzed the legislative power conferred by section 100 of the Government of India Act, 1935, emphasizing the broad scope of items listed in List I, including taxes on income. Despite the absence of a strict definition for "Federal purposes," the court inferred that surcharge proceeds were intended for the Federation's revenues and designated purposes. The judgment refuted the argument that "Federal purposes" and "purposes of the Central Government" denoted distinct concepts, maintaining that the surcharge was within the Federal Legislature's jurisdiction. The court dismissed the petitions, upholding the legality of the surcharge imposition under the Finance Acts of 1942 to 1945. The judgment elucidated that the surcharge, despite being levied "for the purposes of the Central Government," aligned with the broader framework of Federal purposes outlined in the Government of India Act, 1935. The court rejected the contention that the term "Federal purposes" implied a narrower scope than "purposes of the Central Government," emphasizing the legislative intent behind the surcharge provisions. Ultimately, the court concluded that the petitions lacked merit and ordered their dismissal with costs, affirming the validity of the surcharge imposition by the Federal Legislature.
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