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TMI Blog1968 (9) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... harges at the rates provided in the Finance Act, 1964. Sub-section (2) of section 2 of this Act provides that when the total income of an assessee not being a company includes any income chargeable under the head " Salaries ", income-tax and super-tax 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 super-tax shall be increased by a surcharge and special surcharge in the manner provided in the said Act. But sub-section (2) of section 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 super-tax, and not to any of the surcharges. The Appellate Tribunal rejected this contention, holding that income-tax and super-tax 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-section (2) of section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the income of the firm and not by the firm itself. " Income-tax and super-tax are both taxes on income; and super-tax 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. Reference was then made to some of the relevant provisions of the Finance Act, 1963. Sub-sections (1) and (2) of section 2 have to be noticed " 2. Income-tax and super-tax.-(1) Subject to the provisions of subsections (2), (3), (4) and(5), for the assessment year commencing on the 1st day of April, 1963, (a) income-tax shall be charged at the rates specified in Part I of the First Schedule and,- (i) in the cases to which paragraphs A, B, C and E of that part apply, shall be increased by a surcharge for purposes of the Union and, except in the cases to which the said paragraph E applies, a special surcharge, calculated in either case in the manner provided therein ; and (ii) in the cases to which paragraphs A and C of the aforesaid part apply, shall further be increased by an additional surcharge for purposes of the union (hereinafter referred to as additional surcharge) calculated in the manner provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income-tax and super-tax are levied by the Income-tax Act. This is also obvious from the First Schedule to the Finance Act, 1963. Part I of this schedule deals with " Income-tax and surcharges on income-tax ". Then under this heading, it gives the rates of income-tax and also the rates of the surcharges in the case of different classes of assessees. Similarly, Part II of this Schedule deals with "super-tax and surcharges on super-tax ". Under this heading are given the rates of super-tax and the rates of the surcharges on super-tax. The Finance Act, 1964, contains similar provisions in the matter of fixation of the rates of income-tax and super-tax as well as levy and fixation of the rates of the surcharges. We shall only read sub-sections (1) and (2) of section 2 of this Act : " 2. Income-tax and super-tax.-(1) Subject to the provisions of sub- sections (2), (3), (4) and (5), for the assessment year commencing on the 1st day of April, 1964,- (a) income-tax shall be charged at the rates specified in Part I of the First Schedule and, in the cases to which paragraphs A, B, C and E of that part apply, shall be increased by a surcharge for purposes of the Union calculated in ei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Surcharge on duties and taxes is levied under article 271; and it is for purposes of the Union. What is of significance in this context is that taxes on income other than agricultural income is dealt with separately from surcharges on duties and taxes. The former is for distribution between the Union and the States, while the latter is solely for purposes of the Union. Thus, an examination of the relevant provisions contained in the Income-tax Act, the Finance Acts of 1963 and 1964 and the Constitution leads us to the conclusion that income-tax and super-tax do not include surcharge, that they are called by different nomenclatures in all the concerned statutory provisions, and that they are also dealt with separately from each other. The learned counsel for the revenue contended that the surcharges are only increases on, or additions to, income-tax and super-tax, that income tax and super-tax include the surcharges, and that at any rate the words " income-tax " and " super-tax " appearing in sub-section (2) of section 2 of the Finance Acts of 1963 and 1964, when they are examined in the light of the legislative object of enacting the said provisions, would include the surcharge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued, it was clear that the words " income-tax " and " super-tax " used in sub-section (2) would include the surcharges payable thereon under the Finance Act, 1963. There are two difficulties to accept the above argument. In the first place, income-tax and super-tax are charged by deduction at source in respect of certain classes of income by virtue of sections 4(2) and 95(2) respectively of the Income-tax Act, as already stated. These sections provide only for charging of " income-tax " and " super-tax " by deduction ; they do not authorise the charge of the surcharges. The learned counsel for the assessee submitted that, whatever may be the practice of the department, the aforesaid provisions of the Income-tax Act do not authorise the department to charge any surcharge on incomes in respect of which these taxes are chargeable under the Act by deduction at source. Suffice to say for our purpose, this is the very controversy in this case ; and an argument based on an assumption. that " income-tax " and " super-tax " include the surcharges is one in a vicious circle. The next difficulty is that the legislative intent has to be gathered from the provisions of the statute, and to som ..... X X X X Extracts X X X X X X X X Extracts X X X X
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