HARI KRISHNA BHARGAV versus UNION OF INDIA AND ANOTHER

Citation: [1966] 2 S.C.R. 22 · Decided: 06-10-1965 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Dismissed

Cited by 4 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

22 
HARi KRISHNA BHARGA V 
v. 
UNION OF INDIA AND ANOTHER 
October 6, 1965 
[P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, 
M. HIDAYATULLAH, J.C. SHAH AND S. M. SJ.KR!, JJ.] 
Indian Income-tax Act, (Act 43 of 1961) Ch. XX/I-A-Annuity Depo-
sits-.Conzpetence of Par/ianzent-ConsMtution of ~ndia, Art. 14. 
By incorporating Ch. XXII-A in the Indian Income-tax Act, 1961 an 
annuity deposit scheme was introduced requiring certain classes of tax-
payers in the high income group to make deposits at specified rates on 
the adjusted total income with the Central Government. The amount depo· 
sited is made returnable with interest in annual instalments and the instal-
ment is taxable in the year of refund. The tax-payer has the option not 
to make the deposit, but in that case he has to pay tax on his total income 
and fifty per cent of the amount saved by not making the deposit. 
A 
tax payer who is more than seventy years of 
age, 
is 
exempt 
from 
payment of this additional tax. 
The petitioner challenged the validity 
of the annuity deposit scheme on the grounds that, ( i) the Parliament 
was not competent to incorporate in the Income-tax Act a provision 
which was substantially one related to borrowings by the ·Central Gov-
ernment from a class of tax payers (ii) enactment of Ch. XXII-A was 
a colourable exercise of legislative power, and the provisions thereof 
were so harsh and unconscionable that they W(ll"e expropriatory and 
hence not within the legislative competence of the Parliament; and (iii) 
s. 280 and Sch .. II were discriminatory and infringed Alt. 14 of the 
Constitution. 
HELD : (Per Full Court). The petition must be dismissed. 
(Per Gajendragadkar, C. J., Wanchoo, Shah and Sikri, JJ.) : (i) The 
Parliament has by Art. 246 read with entry 82 in Li•t I of the Seventh 
Schedule power to levy "taxes on income other than agricultural income". 
The Indian Income-tax Act, 1961 and the prmisions of the annual Finance 
Acts of Parliament which authorise levy of income-tax at the rates pres-
cribed thereby are undoubtedly enacted in exercise of the powers con-
ferred by entry 82 in List I. Granting that the scheme. of Cb. XXII-A 
A 
c 
I> 
E 
F 
is for borrowing money by the Central Government from the tax payers 
in the higher income group \Vhich is repayable in instalments, power to 
legislate in tha:t behalf i9 still wi,thin the competence of Parliament by 
virtue of Entry 97 of List I of the Seventh Schedule. 
If Parliament 
G 
has the power to legislate for coHecting annuity deposits frorn tax payers, 
there is nothing in the Constitution which disentitl-es Parliament, as a 
matter of legislative arrangement, .to incorporate the provisions relating 
to borrowing from tax-payers in the Income-tax Act or any other statute. 
There is no prohibition against Parliament enacting in a single statute, 
matters which call for the exercise of power under two or more entries 
in List I of the Seventh Schedule. [27 B..P] 
(ii) In exercising power to legislate for collecting annuity deposits., 
Parliament has not sought to resort to any pretence, disguise or subterfuge 
with the object of trespassing upon power not vested in it by the Consti-
tution. 
The doctrine of colourable legislation therefore can have no 
n.1 
"
• 
.. ' 
J. 
• ·, 
H.K. BHARGAV v. UNION (Shah, J.) 
23 
A 
application where Parliament is invested with the authority to legislate 
in respect of annuity deposit and it exercises that power. [29 C-D) 
A taxing statute is subject to Art. 13 of the Constitution; it is therefore 
open to challenge on the ground that it is expropriatory or that the 
statute prescribed no procedure or machinery for assessing tax, but it is 
not open to challenge merely on the ground that the tax is harsh or exces-
sive. [29 G] 
B 
Kunnathat Thathunni Moopil Nair v. State of Kerala & Anr., [1961] 
3 S.C.R. 77, followed. 
K. C. Gajapati Narayan Deo & Ors. v. State of Orissa, [1954) S.C.R. 
1, referred to . 
(iii) The exemption of pernons who have attained the age of seventy 
years from liability to pay additional tax cannot be said to be cliscrimi· 
natory against tax-payers below the age of seventy 
years who 
have 
C 
exercised the option. 
The classification is prima facie reasonable, and 
there is nothing to show that it had no rational nexus to the object sought 
to be achieved by Parliament. [31 DJ 
Per Hidayatullah, J.-(i) The provisions relating to annuity deposit 
come under Entry 82 of List I dealing with taxes on income. T

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