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TMI Blog1966 (3) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... be entitled to a deduction from the additional surcharge of a sum which was either equal to the sum deposited or a certain proportion of his residual income. The expression " residual income " was defined by section 2 of the Finance Act, 1963 (Act No. XIII of 1963). We are not concerned with the other parts of section 4, such as, sub-sections (4) and (5) which were applicable to employees and persons liable to pay advance tax, since all the petitioners before us are persons by whom additional surcharge was payable, and so, are governed by sub-section (3). Section 5 authorises the Central Government to make schemes to be called Compulsory Deposit Schemes in relation to deposits under the Act. The schemes, among other matters, could, as stated in sub-section (2), provide for the rates at which and the period for which compulsory deposits shall be made, the manner of deposit, the specification of authorities for collection and the like. Clause (k) of that sub-section authorised the Central Government to provide in such scheme for any other matter which might be necessary or proper for the effective implementation of the scheme. Section 12 prescribed a penalty for failure to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make a deposit under the Act flows from a completed assessment by which the additional surcharge is determined, since the deposit has to be made only by those persons by whom additional surcharge is payable. It was said that no additional surcharge is payable unless the amount of the surcharge payable is determined by an order of assessment, and that the Central Government could not, in consequence, prescribe a date for the deposit which precedes the date of the completion of the assessment. It was also said that section 4(3) of the Act is a self-contained and exhaustive provision in regard to every matter regulating the deposit by a person by whom additional surcharge is payable, including the period within which the deposit has to be made, and that paragraph 4(1) of the Scheme, which prescribes a date for the deposit in transgression of section 4(3) of the Act, is liable to be denounced as unconstitutional. Before discussing the sustainability of this criticism, it would be convenient to discuss the other condemnations made of paragraph 4(1) and the first proviso to that paragraph. It was said that paragraph 4(1), which provides that the deposit by a person by whom additional s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. We are of the view that the first proviso to paragraph 4(1) renders the discussion of these submissions unnecessary. That proviso which is a special provision made applicable to the deposit concerning the assessment year commencing on April 1, 1963, with which we are concerned, prescribed a date for the deposit other than the date prescribed by sub-paragraph (1), and so, the difficulty emanating from sub-paragraph (1) does not exist. The deposit in respect of that assessment year had to be made under the first proviso within thirty days from the date of service of notice under section 156 of the Income-tax Act, 1961, or by June 30, 1964, whichever was earlier. The arrival of both these days would have been preceded by the commencement of the operation of the Finance Act, 1963, and, in consequence, the computation of the residual income and the estimate of the deposit were both possible. The Compulsory Deposit Scheme Act did not have operation beyond the assessment year with which we are concerned, and so, the difficult predicament which might have arisen during the subsequent assessment years ceases to have relevance. So long as the first proviso removes the difficulty such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 2 of the Finance Act, 1963 (13 of 1963) " The word " payable " occurring in this sub-section has, according to Mr. Srinivasan, the same meaning which it has received under the Income-tax Act. It was said that the word " payable " in section 2(2) of the Income-tax Act, 1922 (XI of 1922), before that sub-section was amended in the year 1953 and which is also in section 156 of the Income-tax Act, 1961, has been understood by the courts in a particular way, and that the meaning which that word has so received, should be the meaning which we should give to that word in section 4(3) of the Compulsory Deposit Scheme Act. Our attention was drawn to the decision of the High Court of Bombay in Commissioner of Income-tax v. Mazagaon Dock Co. Ltd., that a person became an assessee as defined by section 2(2) of the Income-tax Act, 1922 (XI of 1922), only after his income was ascertained or assessed under section 23. Section 2(2) of that Act defined an assessee as a person by whom income-tax was payable. Depending on this elucidation and upon the amendment in the year 1953 of the definition contained in that sub-section, we were asked to say that if income-tax is payable only after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n falling under clause (b) of section 2 " with which section 4(3) opens, substitute the words " A person liable to payment of tax under the Income-tax Act " who would be the person falling under clause (b) of section 2, and that, when we do so, section 4(3) would read : " A person liable to payment of tax under the Income-tax Act by whom any additional surcharge is payable in respect of any assessment year, may make a deposit ....... The expiscation made was that if we read the sub-section in that way, nothing would be clearer than the great distinction between a person liable to pay additional surcharge and a person by whom additional surcharge is payable, and that, therefore, what attracts the obligation to make the deposit is not the liability to pay additional surcharge but the arrival of the stage when it becomes payable after its ascertainment through an assessment. The question is whether we should understand the word " payable " occurring in section 4(3) of the Compulsory Deposit Scheme Act, 1963, as involving the concept that the deposit becomes payable only after the additional surcharge is quantified by an order of assessment. It is a sound rule of construction that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute which makes that conclusion irresistible. Section 29 of the Income-tax Act, 1922, like section 156 of the Income-tax, 1961, provides for such notice of demand in respect of a tax, penalty, or interest which has become due in consequence of any order passed under or in pursuance of the Act. The words due in consequence of any order passed under or in pursuance of this Act occurring in that section which correspond to the words " is payable in consequence of any order passed under this Act " occurring in section 156 of the new Act, make no other interpretation possible. Those are the words which insist upon an order passed under the Act before a demand for the payment of the amount could be made. Although there is in section 4(3) of the Compulsory Deposit Scheme Act the word " payable ", the sub-section does not say that the additional surcharge which is so payable should have become payable in consequence of any order under the Income-tax Act. The absence of those words in that sub-section is what makes us doubt that we should read the word " payable " in that sub-section as it has been understood in the Income-tax Act. There are, in our opinion, weighty reasons for think ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same day on which the tax or additional surcharge becomes payable on an order made under the Income-tax Act. But, to say so would be to read into section 4(3) words which it does not contain, and we think that the exegesis is artificial and inexact. We think that the date on which the additional surcharge has to be paid cannot coincide with the date on which the compulsory deposit has to be made. The payment of additional surcharge has to be made only after its determination and upon service of the notice of demand. But, when the compulsory deposit is made, the Income-tax Officer should deduct from the additional surcharge charged by the Finance Act the amount deposited or a smaller sum as the case may be. The acceptance of the argument that the determination of the additional surcharge should precede the deposit would involve two determinations of the additional surcharge, one by an order of assessment before the deposit, and the other thereafter for making the deduction, and, unless the first is amended by the second, both would have equal efficacy. We should feel reluctant to accept an interpretation which produces the necessity for two such determinations in regard to the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty could be imposed under section 12. The condemnation of paragraph 4(1) of the Scheme would render section 12 unmeaning and rob it of its potency, since nowhere else does the Act specify the time for the deposit to be made. It was, however, said that, although that would be the position arising on the rejection of the contention that section 4(3) itself specifies that period of time, the specification of that period by paragraph 4 of the Scheme has relevance only to the imposition of a penalty and not for the purpose of section 4(3). The argument leads to the incongruity that there would be two periods of time for the deposit and that while the neglect to make the deposit within one such period would entail a punishment under section 12, a deposit within the other period which of course would be longer would earn a reward under section 4(3). Then again, while the penalty imposed along with the amount not deposited could be recovered as an arrear of land revenue under section 13, the defaulter could even after the imposition of a penalty or the commencement of such proceedings, make a deposit and claim a deduction in the additional surcharge. It was submitted that there would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for its payment should be preceded by an assessment. So understood, he becomes a person by whom it is payable when the Finance Act charges it, and we feel disposed to read the section in that way without feeling hampered by a technical or other meaning which any expression occurring in it may have received in another statute or context. Our leaning to this construction is strongly aided by the occasion and design of the Act whose primary purpose was the augmentation of revenue through the deposit which the Act compels. The Act directs for that purpose the preparation of schemes by the Central Government providing for many matters including the computation of the amount, the manner of its deposit, the period within which it should be made and the like. Among the income-tax payers, those in receipt of salaries or liable to pay advance tax to whom sub-sections (4) and (5) of section 4 respectively refer, could not postpone the deposit until they were assessed. These features of the Act and the insistence of sections 12 and 13 on a deposit " within the time specified therefor " preclude the postulate that a person from whom additional surcharge could be exacted, unlike others, enjoy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e others whose assessments were not completed, and so, could make the deposit by June 30, 1964. Under the first proviso, the deposit has to be made either within thirty days of the service of notice of demand under section 156 of the Income-tax Act, 1961, or by June 30, 1964, whichever is earlier. So, if the period of thirty days after the service of the notice of demand expired before June 30, 1964, the deposit had to be made earlier than June 30, 1964. But one in whose case the period had not expired or who had not been served with a notice of demand or in whose case the assessment had not been completed, could make the deposit within the longer period which expired on June 30, 1964. It may be so, but the complaint of discrimination cannot properly emanate from the petitioners who were not discriminated against but who, on the contrary, could have made the deposit within the longer period. At one stage during the argument, it was contended by Mr. Rajasekhara Murthy for the respondents that our jurisdiction could not be invoked unless preceded by the resort to the remedy, which, it was stated, was available under section 4(10) of the Act, which provided that, if any doubt or di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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