JUSTICE DEOKI NANDAN AGARWALA VS UNION OF INDIA AND ANOTHER
1999 P T D 3831
[237 I T R 872]
[Supreme Court of India]
Present: S. P. Bharucha, B. N. Kirpal, S. Rajendra Babu, Syed Shah Mohammed Quadri and M. B. Shah, JJ
Justice DEOKI NANDAN AGARWALA
Versus
UNION OF INDIA and another
Civil Appeal No.411 of 1982, decided on 04/05/1999.
(Appeal by Special Leave from the order, dated 28th March, 1981 of, the I.T.O., A Ward, Allahabad for the Assessment Year 1978-79).
(a) Income-tax---
----Legislative powers---Parliament---Judges' salaries---Power to legislate on salaries different from power to tax income---Judges' salaries can be taxed by Act of Parliament---Constitution of India, Arts. 125 & 221 [before amendment w.e.f. 1-4-1986], Sched. VII, List I, Entry 82.
(b) Income-tax---
----Income---Liability to tax---High Court and Supreme Court Judges-- Remuneration received is salary---Taxable under head "salaries"-- Constitution of India, Arts. 12-5 & 221, Sched. VII, List I, Entry 82---Indian Income Tax Act, 1961,, S.14.
The subject of the salary of High Court and Supreme Court Judges and the subject of tax on income are altogether different. Although prior to the amendment of Articles 125 and 221 of the Constitution of India with effect from 1st April, 1986, Parliament could not have legislated on Judges'" salaries, the salary of a Judge of a High Court or the Supreme Court is income and is taxable by an Act of Parliament in just the same manner as is the income of any other citizen.
It is true that High Court and Supreme Court Judges have no employer, but that does not mean that they do not receive salaries. They are Constitutional functionaries. Articles 125 and 221 of the Constitution deal with the "salaries" of Supreme Court and High Court Judges respectively and expressly state that what the Judges receive are "salaries". Therefore, what the Judges receive are salaries and such salaries are taxable as income under the head "salaries" referred to in section 14 of the Income Tax Act, 1961.
Satish Chandra, Senior Advocate (P. P. Singh and S. R. Sethia, Advocates with him) for Appellant.
V. Gauri Shankar, Senior Advocate and F. S. Nariman, Senior Advocate: Amicus curiae (S. Rajappa, S. K. Dwivedi, S. W. A. Quadri, P. Parameshwaran and G. B. Sathe, Advocates with them) for Respondents.
JUDGMENT
S. P. BHARUCHA, J.---The appellant was a Judge of the Allahabad High Court. He filed his income-tax return for the assessment year 1978-79 on the basis that the salary that he received as a Judge was not liable to tax under the Income Tax Act, 1961. The contention having been rejected both by the Income-tax Officer and in appeal, a special leave petition was filed. Leave to appeal was granted and on April 19, 1983 (see (1983) 142 ITR (St:) 98), the following four questions referred by two learned Judges to a Constitution Bench (page 101):
"(1) Whether the salary of a Judge of the High Court of a State payable under clause (1) Of Article 221 of the Constitution salary of a judge of the Supreme Court payable under clause (1) ofArticle 125 is taxable by a law made by Parliament under entry 82 of List 1 of the Seventh Schedule?
(2) Whether the expression 'rupees' in Part D of the Second Schedule which stipulates the suns payable to the judges of the Supreme Court and the Judges of the High Court implies the purchasing power equivalent to the goods and services that could be bought in the year 1950. That is to say, whether the salaries so fixed should be construed as meaning their real value in terms of goods ants services which they could buy at the commencement of the Constitution or do they represent their nominal value at any given point of time?
(3) Whether the expression 'such allowances' referred to in clause (2) of Article 125 and clause (2) of Article 221 of the Constitution as payable to 'a Judge of the Supreme. Court or a Judge of the High Court of a State includes dearness allowance; and if it is so, whether the dearness allowance as paid to them from February 1, 1978, is relatable to the; as there appears to be no express law made by Parliament for that purpose?
(4) Whether the salary of a Judge of the Supreme Court payable under clause (1) of Article 125 or the salary of a judge of the High Court of a Sate payable under clause (1) of Article 221 is not taxable under the head 'salaries'; and, if it is so, is it taxable under any other head of income referred to in section 14 of the Income Talc. Act, 1961?"
It appears that the second question arose on a writ petition which stood transferred to this Court and which was withdrawn earlier today. This question does not, therefore, survive for consider anon. The third question, it is, said by learned counsel for the appellant, was raised suo motu by this Court and we do not think, in the circumstances, that it should be answered.
Learned counsel for the appellant concentrated on the first and fourth questions. The fundamental question is whether the salary of a High Court and a Supreme Court Judge was liable to income-tax prior to April, 1986. It must be stated here that it is not disputed that, with effect from April 1, 1986, when Articles 125 and 221 stood' amended, such salaries are taxable because Parliament then became entitled to legislate thereon.
The contention on behalf of the appellant is that parliament could not legislate, prior to the said amendment, on the subject of the salaries of High Court and the Supreme Court Judges and that, therefore, their salaries were not liable to income-tax because the definition of "income" under the Income-tax Act includes "salary". The argument really is that the levy of income-tax upon salary, by Parliamentary enactment. cuts down the Judges salaries.
There can be no doubt that prior to the said amendment Parliament could not have legislated on Judges salaries, but it is. a far cry to. conclude therefrom that the salary of a Judge is not taxable under the Income-tax Act The subject of the salary of a High Court and the Supreme Court Judges and the subject of tax on income are altogether different and the conclusion that is sought to be drawn is quite unacceptable. The salary of a Judge of a High Court and the Supreme Court is income and is taxable by Act of Parliament in just the same manner as is the income of any other citizen.
It is contended qua the fourth question that, in any event, a Judge of a High Court and the Supreme Court has no employer and, therefore, what he receives is not salary; accordingly, what he receives as remuneration is not taxable under the head of salary under the Income-tax Act. To our trend, there is a misconception here. It is true that High Court and the Supreme Court Judges have no employer, but that, ipso facto, does not mean that they do not receive salaries. They are Constitutional functionaries. Articles 125 and 221 of the Constitution deal with the "salaries" of Supreme Court and High Court and High Court Judges respectively and expressly state that what the Judges receive are "salaries". It is not possible to hold, therefore. that what Judges receive are not salaries or that such salaries are not taxable as income under the head of salary.
The appeal is dismissed.
M.B.A./4195/FC Appeal dismissed.