1966 (3) TMI 10 - HC - Income Tax

Compulsory Deposit Scheme - Whether, paragraph 4 of the Compulsory Deposit (Income-tax Payers) Scheme, 1963, made by the Central Government in exercise of the power conferred by section 5 of the Compulsory Deposit Scheme Act, 1963 is constitutionally valid - Held, yes

Summary

Issues Involved:
1. Validity of Paragraph 4(1) of the Compulsory Deposit (Income-tax Payers) Scheme, 1963.
2. Interpretation of the term "payable" in Section 4(3) of the Compulsory Deposit Scheme Act, 1963.
3. Alleged discrimination under the first proviso to Paragraph 4(1) of the Scheme.

Detailed Analysis:

1. Validity of Paragraph 4(1) of the Compulsory Deposit (Income-tax Payers) Scheme, 1963:
The petitioners challenged Paragraph 4(1) of the Scheme, arguing that it required a deposit before the assessment year, which they claimed was impossible and unconstitutional. They contended that Section 4(3) of the Act, which allowed deductions from the additional surcharge, implied that deposits should be made only after the surcharge was determined by assessment. The court held that the first proviso to Paragraph 4(1) provided a specific timeline for the assessment year commencing April 1, 1963, allowing deposits within thirty days of the notice of demand or by June 30, 1964. This proviso removed the difficulty alleged by the petitioners. The court concluded that Paragraph 4(1) was valid and did not transgress Section 4(3) of the Act.

2. Interpretation of the term "payable" in Section 4(3) of the Compulsory Deposit Scheme Act, 1963:
The petitioners argued that "payable" in Section 4(3) meant that the deposit obligation arose only after the additional surcharge was quantified by assessment. They referenced interpretations from the Income-tax Act to support their argument. The court disagreed, stating that the word "payable" should be understood in the context of the Compulsory Deposit Scheme Act, which aimed to augment revenue. The court emphasized that the duty to make deposits was not postponed until the assessment and that the Central Government had the authority to specify the deposit period under Section 5(2)(b) and (k). The court concluded that "payable" meant the surcharge was due upon the imposition by the Finance Act, not upon assessment.

3. Alleged discrimination under the first proviso to Paragraph 4(1) of the Scheme:
The petitioners claimed discrimination, arguing that those whose assessments were completed had a shorter period to make deposits compared to those whose assessments were not completed. The court found no merit in this argument, noting that the petitioners could have made the deposits within the longer period provided by the first proviso. The court held that the complaint of discrimination was unfounded as the petitioners were not adversely affected by the different timelines.

Conclusion:
The court dismissed the petitions, upholding the validity of Paragraph 4(1) of the Scheme and rejecting the petitioners' interpretation of "payable" in Section 4(3). The court also found no discrimination in the application of the first proviso to Paragraph 4(1). The judgment emphasized the necessity of timely deposits to ensure the effective implementation of the Compulsory Deposit Scheme Act.