Hari Krishna Bhargav Vs. Union of
India & ANR  INSC 199 (6 October 1965)
06/10/1965 SHAH, J.C.
GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N.
CITATION: 1966 AIR 619 1966 SCR (2) 22
F 1975 SC2016 (14) RF 1989 SC 576 (25) R 1990
Indian Income-tax Act, (Act 43 of 1961) Ch.
XXII-A-Annuity Deposits-Competence of Parliament-Constitution of India, Art.
By incorporating Ch. XXII-A in the Indian
Income-tax Act, 1961 an annuity deposit scheme was introduced requiring certain
classes of taxpayers in the high income group to make deposits at specified
rates on the adjusted total income with the Central Government. The amount
deposited is made retumable with interest in annual installments and the installment
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 Incometax Act,
a provision which was substantially one related to borrowings by the Central
Government 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 wore expropriatory and hence not within the
legislative competence of the Parliament; and (iii) s. 280 and Sch. 11 were
discriminatory and infringed Art. 14 of the Constitution.
HELD: (Per Full Court). The petition must be
(Per Gajendragadkar, C. J., Wanchoo, Shah and
Sikri, JJ.) :
(i) The Parliament has by Art. 246 read with
entry 82 in List I of the Seventh Schedule power to levy "tax-es on income
other than agricultural income". The Indian Incometax Act, 1961 and the
provisions of the annual Finance Acts of Parliament which authorise levy of
income-tax at the rates prescribed thereby are undoubtedly enacted in exercise
of the powers conferred by entry 82 in List I. Granting that the scheme of Ch.
XXII-A is for borrowing money by the Central Government from the tax payers in
the higher income group which is repayable in installments, power to legislate
in that behalf is still within the competence of Parliament by virtue of Entry
97 of List I of the Seventh Schedule. If Parliament has the power to legislate
for collecting annuity deposits from tax payers, there is nothing in the
Constitution which disentitles 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 probibition
-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-F] (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 Constitution.
The doctrine of colourable legislation
therefore can have no 23 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 excessive. [29 G] Kunnathat Thathunni Moopil
Nair v. State of Kerala & Anr.,  3 S.C.R. 77, followed.
K. C. Gajapati Narayan Deo & Ors. v.
State of Orissa,  S.C.R. 1, referred to.
(iii)The exemption of persons who have
attained the age of seventy years from liability to pay additional tax cannot
be said to be discriminatory against tax-payers below the age of seventy years
who have 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 D] Per Hidayatullah, J.-(i) The provisions
relating to annuity deposit come under Entry 82 of List I dealing with taxes on
income. The annuity deposit is an alternative to paying income-tax and is a
means of reduction in the amount of income-tax. The money collected is returnable
with interest in equal installments spread over ten years and the amount is
taxable in the year of refund. It is not borrowing within the meaning of Art
292 of the Constitution for borrowing under this Article is an executive action
and not legislative power except in so far as to fix the limits of borrowing
and of giving guarantees within such limits.
Entry 97 conferring residuary powers can only
be invoked when there is no other entry in any of the three Lists under which
the impugned legislation could come [33 B-E].
(ii)The provisions are neither colourable nor
discriminatory. They are not colourable, because, though called annuity
deposits, they only defer payment of tax on a part of assessable income. [33
ORIGINAL JURISDICTION : Writ Petition No. 17
Petition under Art. 32 of the Constitution of
India for the enforcement of Fundamental Rights.
N. D. Karkhanis, E. C. Agarwala and P. C.
Agarwala, for the petitioner.
C. K. Daphtary, Attorney-General, S. V.
Gupte, SolicitorGeneral, R. Ganapathy Iyer and R. H. Dhebar, for the respondent.
The Judgment of GAJENDRAGADKAR C.J., WANCHOO,
SHAH and SIKRI, JJ. was delivered by SHAH J.
HIDAYATULLAH J. delivered a Separate Opinion.
Shah, J. The petitioner. who is a trader at
Meerut was ordered by the Income-tax Officer, D-Ward, Meerut, to pay Rs. 1,800/as
annuity deposit under Ch. XXII-A of the Income-tax Act, 1961. The petitioner
has filed this petition challenging the validity of the demand on the plea that
Ch. XXII-A of the 24 Income-tax Act is unconstitutional and is otherwise
violative of the fundamental right guaranteed by Art. 14 of the Constitution.
The Indian Income-tax Act 43 of 1961 was
enacted by the Parliament to consolidate and amend the law relating to
income-tax and super-tax. The Act came into force on April 1, 1962. The
Parliament enacted Finance Act 5 of 1964 to give effect to the financial
proposals of the Central Government for the financial year 1964-65, and by S. 3
( 1 ) of that Act it was provided :
"Save as otherwise provided in Chapter
XXII-A of the Income-tax Act, annuity deposit for the assessment year
commencing on the 1st day of April, 1964 shall be made by every person to whom
the provisions of that Chapter apply at the rates specified in the Second
Schedule." By s. 44 of the Finance Act, Ch. XXII-A relating to annuity
deposits containing ss.280-A to 280-X was introduced into the Income-tax Act.
By that chapter taxpayers of certain categories are required to make annuity
deposits for every assessment year commencing from the assessment year 1964-65.
By the Second Schedule to the Finance Act,
rates of annuity deposits are prescribed. The deposit has to be made by the
specified categories of taxpayers, having a total income exceeding Rs. 15,000
at the prescribed percentages rising from 5 to 12 1/2 on the adjusted total
income. By the Explanation to the Second Schedule, the expression "total
income" under the Schedule means the total income computed in the manner
laid down in the Income-tax Act without making any allowance under s. 280-0 of
that Act. A taxpayer who is a resident and falls within any of the following
categories is liable to make the annuity deposit (i) an individual, who is a
citizen of India, (ii) a Hindu undivided family, (iii) an unregistered firm,
(iv) an association of persons or a body of individuals, whether incorporated
or not (other than a company or a cooperative society), and (v) an artificial
juridical person referred to in subclause (vii) of cl. (31) of S. 2 of the
Income-tax Act (other than a corporation established by a Central, State or
25 All non-residents and all companies and
corporations and cooperative societies established by Central; State' or
Provincial, Acts are accordingly exempted from the operation of the annuity
deposits scheme. But a taxpayer who is required by s. 280-A, to make an annuity
deposit may exercise his option not to make it, by a notice in writing to the
Income-tax Officer before the 30th of June of the assessment year. The option
once exercised' is irrevocable, and operates in respect of the assessment year
and all subsequent years. The taxpayer who exercises the option has to pay
beside the income-tax payable on his total income, additional income-tax which
is equal to half of the amount which he saves by not making the deposit. But an
individual who on the last day of the relevant previous year is more than
seventy years of age is exempt from payment of this additional Income-tax.
Section 280B defines, amongst other expressions, "adjusted total
income," a percentage of which is by the Second Schedule liable to be
deposited as annuity deposit. Annuity deposit has to be made in advance on the
adjusted total income of the previous year, at the rate or rates prescribed by
any Central Act. Authors, playwrights, artists, musicians and actors are
permitted to make at their option, deposit up to 25% of the amount derived from
their profession, in addition to the amount which they are required to make. A
person receiving gratuity from his employer in excess of the amount exempt from
income-tax has the option of making an annuity deposit not exceeding 50% of the
amount of gratuity chargeable to income-tax, in addition to the amount he
is-required to make. The annuity deposit is repayable in ten annual equated installments
of principal and interest at such rates as may be prescribed. The amount of
annuity deposit payable by a taxpayer in any year is admissible as a deduction
in computing his total income charged to tax for that year. If the adjusted total
income of an assessee includes income chargeable to income-tax under the head
"salaries", allowance has to be made in computing the income under
that head, and if there be no income under that head or the annuity deposit
required to be made exceeds the salary income, the whole of the balance of the
annuity deposit is allowable as a deduction in computing the total earned
income. The installment of annuity due on any annuity deposit is chargeable to
income-tax as earned income of the taxpayer in the year in which it becomes
The Income-tax Officer on or after the 1st
day of April in the financial year, may by order in writing, require the
depositor who has been previously assessed to make an advance deposit computed
in accordance with 26 S. 280-E. The Income-tax Officer is also authorised to
issue a demand notice and also to modify, if necessary, the notice of demand
after regular assessment has been made. A depositor may make his own estimate
of his adjusted total income before the last installment is due, that his
adjusted total income for the previous year is less than the income in respect
of which. he is required to make the deposit. A taxpayer who fails to pay the
annuity deposit by the due date is exposed to a penalty which may amount to as
much as 50% of the deposit required to be made by him. A taxpayer who receives
income of. the nature of commission, which forms part of his adjusted total
income, may defer making advance deposit, when commission is receivable
periodically and is not received or adjusted by the payer in the depositor's
account. A person who has not been previously assessed to income-tax is liable
to pay penalty if he fails to make an advance deposit on his own estimate. The
Incometax Officer is entitled to determine annuity deposit on the basis of
provisional assessment or regular assessment and he is entitled to recompute
the annuity deposit, when the total income of the assessee is enhanced or
reduced, or the status under which he is assessed is altered, or when the
registration of a firm is cancelled. Arrears of annuity deposit and penalty are
recoverable in the manner provided in Ch. XXII-D of the Income-tax Act for the
recovery of income-tax.
Broadly stated, the scheme of Ch. XXII-A is
that certain classes of taxpayers in the comparatively higher income groups are
required to make out of their total income deposits at the specified rates on
the adjusted total income, with the Central Government. The amount so deposited
is made returnable with interest in ten annual installments. In computing the
total income of the year in which it is made the deposit is an admissible
But the installment due in any year is liable
to be adjusted in the total income of the year in which it is due. The taxpayer
however has the option not to pay the deposit, and pay tax on his total income
and fifty per cent of the amount saved by not making the deposit.
The petitioner submits that the scheme of
annuity deposit incorporated in Ch. XXII-A is invalid because (a) the
Parliament had no competence to incorporate in the Indian Income-tax Act, a
provision which was substantially one relating to borrowings by the Central
Government from a class of taxpayers; (b) the provisions contained in Ch.
XXII-A are enacted in colourable exercise of
legislative power, and that in any event 27 they are so harsh and
unconscionable that they may be regarded as expropriatory and on that account
not within the legislative competence of the Parliament and (c) the provisions
of s. 280 and Sch. II are discriminatory and infringe the fundamental freedom
under Art. 14 of equality before the law.
In our view there is no substance in any of
The Parliament has by Art. 246 read with
Entry 82 in List I of the Seventh Schedule power to levy "taxes on income
other than agricultural income". The Indian Income-tax Act, 1961 and the
provisions of the annual Finance Acts of the Parliament which authorise levy of
income-tax at the rates prescribed thereby are undoubtedly enacted in exercise
of the powers conferred by Entry 82 in List I. Granting that the scheme of Ch.
XXII-A is for borrowing money by the Central Government from the taxpayers in
the higher income group at the rates prescribed, which is repayable in installments,
power to legislate in that behalf is still within the competence of the
Parliament by virtue of Entry 97 of List I of the Seventh Schedule. Counsel for
the petitioner does not contend that power to collect annuity deposit is
outside the Parliament's competence : he merely urges that the Parliament could
not incorporate the provisions relatable to the exercise of the power of
borrowing exercisable under Entry 97 in a legislation which was exclusively
enacted in exercise of the powers under Entry 82. But if the Parliament has the
power to legislate for collecting annuity deposits from taxpayers, there is
nothing in the Constitution which disentitles the Parliament as a matter of
legislative arrangement to incorporate the provisions relating to borrowing
from taxpayers in the Income-tax Act or any other statute. There is no
prohibition against the Parliament enacting in a single statute, matters which
call for the exercise of power under two or more entries in List I of the
Illustrations of such legislation are not
wanting in our statute book, and the fact that one of such entries is the
residuary entry does not Also attract any disability. The question is one of
convenience and not of power. It appears that the Parliament thought, that the
provisions relating to annuity deposits could appropriately be incorporated in
the Indian Income-tax Act, 1961. The Parliament did enact the Compulsory
Deposit Scheme Act, 1963, as a separate statute, but that does not mean that it
had no power to incorporate it within the Income-tax Act, if the Parliament so
The Income-tax Act, 1961, is a longish
statute and incorporation of other provisions therein may make it somewhat
unwieldy. But it must be said that the Chapter relating to the annuity deposit
scheme is closely related to the scheme of levy of income-tax.
LI Sup. C.I./66-3 28 The power of assessment,
and collection of annuity deposit is entrusted to Income-tax Officers, and the
machinery of the Income-tax Act is utilised for that purpose. The annuity
deposit is based on the total income of the taxpayer : if the taxpayer pays the
deposit he is entitled to deduction of the amount in the computation of income
tax, and if he exercises the option not to pay the deposit, he is rendered
liable to Day additional income-tax. The annuity deposit and the penalty
payable for failure to make the deposit without exercising the option are made
recoverable in the manner provided by Ch. XVII-D for the recovery of arrears of
income-tax. If the Annuity Deposit Act were enacted as a separate Act, several
provisions requiring references to the Income-tax Act and conferment of power
upon the authorities constituted under the Income-tax Act would have had to be
duplicated. To avoid repetition and cross references the Legislature has
thought it proper to enact within the Indian Income-tax Act those provisions
relating to annuity deposits and has conferred upon the Income-tax Officer
power to assess and collect annuity deposits, and exercise of that power may
not be caviled at even by a purist in draftsmanship.
The argument that Ch. XXII-A is a colourable
exercise of legislative power has no substance. As pointed out by this Court in
K. C. Gajapati Narayan Deo and others v. The State of Orissa " .. ..the
doctrine of colourable legislation does not involve any question of bona fides
and mala fides on the part of the legislature.
" statute is constitutional or not is
question of power...... if the Constitution of a State distributes the legislative
powers amongst different bodies, which have to act within their respective
spheres marked out by specific legislative entries, or if there are limitations
on the legislative authority in the shape of fundamental rights, questions do
arise as to whether the legislature in a particular case has or has not, in
respect of the subject-matter of the statute or in the method of enacting it,
transgressed the limits of its constitutional powers. Such transgression may be
patent, manifest or direct, but it may also be disguised, covert and indirect,
and it is to this latter class of cases that the expression "colourable
legislation" has been applied in certain judicial pronouncements. The idea
conveyed (1)  S.C.R. 1.
29 by the expression is that although
apparently a legislature in passing a statute purported to act within the
limits of its powers, yet in substance and in reality it transgressed these
powers, the transgression being veiled by what appears, on proper examination,
to be mere presence or disguise." It is not suggested that the power to
legislate for collection and repayment of annuity deposits is within the power
of the States under List II of the Seventh Schedule.
If the Parliament has the power to enact
legislation for levying, assessing and collecting annuity deposits and for
repayment in annual installments, by enacting that legislation the Parliament
does not trespass upon powers outside its domain. In exercising power to
legislate for collecting annuity deposits, the Parliament has not sought to
resort to any presence, disguise or subterfuge with the object of trespassing
upon power not vested in it by the Constitution. The doctrine of colourable
legislation therefore can have no application where the Parliament is invested
with the authority to legislate in respect of annuity deposit and it exercises
It was urged that even if the exercise of the
powers to compel deposits be regarded as not unconstitutional, its exercise is
harsh and the demands made by the State are excessive. Exercise of the taxing
power of the State has undoubtedly to be tested in the light of the fundamental
freedoms guaranteed by Ch. III of the Constitution. It is not a power which
transcends fundamental rights, as was assumed in certain earlier decisions :
Ramjilal v. Incometax Officer(1); Laxmanappa Hanumantappa v. Union of India(2);
and the view expressed by Venkatarama Ayyar, J., in S. Anantha Krishnan v.
State of Madras(3). But it is now settled by decisions of this Court (e.g.)
Kunna that Thathunni Moopil Nair, v. The State of Kerala and Another (4) that a
taxing statute is subject to the "conditions laid down in Art. 13 of the
Constitution". A taxing statute may.
accordingly be open to challenge on the
ground that it is expropratary; or that the statute prescribes no procedure or
machinery for assessing tax, but it is not open to challenge merely on the
ground that the tax is harsh or excessive.
The argument that the scheme of annuity
deposit makes an unlawful discrimination between taxpayers is also devoid of
force. Article 14 of the Constitution guarantees equality before the law, and
equal protection of the laws. But thereby the power of the Legislature to make
a reasonable classification of persons, objects (1)  S.C.R. 127.
(2)  1 S.C.R. 769.
(3) I.L.R.  Mad. 933.
(4)  3 S.C.R. 77.
30 or transactions for attaining certain
objectives is not excluded. If a classification is based on some real and
substantial distinction, bearing a just and reasonable relation to the objects
sought to be achieved, it is valid.
It is true that an assessee whose total
income does not exceed Rs. 15,000/is not liable to pay any annuity deposit, and
the demand for annuity deposit, unlike income tax is based on a progressively
increasing percentage of the adjusted total income, and for a person having a
total income exceeding Rs. 70,000/the rate of deposit is as high as 12 1/2 per
cent. But neither the exemption of taxpayers having an income below Rs. 15,000/nor
the progressively steeper rates of demand can be regarded as unreasonable.
What is sought to be achieved by the Act is
the twin objective of mobilisation of private savings for public purposes and
imposing curbs on the inflationary trends in the economy of our country. To
secure this purpose, provision has been made to collect what may reasonably be
assumed to be surplus income or private savings so as to make them available
for national development.
The Legislature has been of the view that
persons who have an income exceeding Rs. 15,000/per annum at the present level
of taxation, and the ruling prices, may be able to make savings which may
usefully augment the public finances.
Nothing has been placed before us to show
that the view is not reasonable. The view of the Legislature that in the higher
income groups there would be larger savings cannot also be said to be
unreasonable. It is true that a slab system in vogue for the computation of
non-corporate income tax has not been adopted, and the demand of deposit is
made at a steeply rising percentage on the adjusted total income.
But that by itself is not a ground for
regarding the levy as unreasonable. In order to do away the anomalies the
Schedule of rates has provided marginal adjustments. It may also be noticed
that simultaneously with the introduction of the annuity deposits scheme, the
personal rates of income tax have been reduced. Again it may be noticed that
the scheme for the annuity deposits is in a sense not compulsory. By making a
declaration it is open to an assessee not to make the contribution as required
by the Act. He may elect not to make the deposit, and pay income tax on his
total income. If he has not attained the age of seventy years on the last day
of the previous year he will also have to pay additional income-tax as
prescribed by subs. (2) of S. 280-X. There is undoubtedly a distinction made
between persons who are below the age of seventy years on the last day of the
previous year, and those who have attained that age: the former on exercising
the option not to pay annuity 31 deposits will have to pay tax on the total
income and additional income-tax, the latter will only pay tax on total income
but not additional income-tax. The Legislature is apparently of the view,
having regard to the life span in our country, capacity to engage in gainful
employment and other relevant circumstances, that the latter should be exempted
from payment of additional tax. Every taxpayer who is otherwise required to
make a deposit is permitted to declare his option under s. 280-X(1) and once he
does so, he is not liable to make the annuity deposit. Such a taxpayer will be
obliged to pay income-tax on his total income. Only a section out of this class
of taxpayers are exempted from liability to pay additional income-tax. It is
difficult to regard the provision exempting this class of persons from
liability to pay additional tax as depriving other taxpayers below the age of
seventy who have exercised the option under s. 280-X(1) of the guarantee of
equal protection of the laws. The classification is prima facie reasonable, and
the petitioner has placed no materials before us to prove' that it is not
genuine or has no rational nexus to the object sought to be achieved by the
The petition fails and is dismissed with
Hidayatullah, J. I agree that this petition
should be dismissed with costs. I agree generally with the reasons given by my
brother Shah, but I wish to say that I do not rest my decision on entry No. 97
of List I of the Seventh Schedule. It was argued that entry No. 97 of List I
must in any event cover this tax even if the entry relative to Income-tax was
inadequate to cover it. The very frequent reliance on entry No. 97 makes me say
these few words. That entry, no doubt, confers residuary powers of legislation
or taxation but it is not an entry to avoid a discussion as to the nature of a
law or of a tax with a view to determining the precise entry under which it can
come. Before recourse can be had to entry No. 97 it must be found as a fact that
there is no entry in any of the three Lists under which the impugned
legislation can come. For if the impugned legislation is found to come under
any entry in List 11, the residuary entry will not apply. Similarly, if the
impugned legislation falls Within any entry in one of the other two Lists
recourse to the residuary entry will hardly be necessary. The entry is not a
first step in the discussion of such problems but the last resort. One cannot
avoid the issue by taking its aid unless such a course is open. It is always
necessary to examine the pith and substance of any law impugned on the ground
of want of legislative competence with a view to ascertaining the precise entry
in which it can come.
32 The entries in the three Lists were
intended to be exhaustive and it would be a very remote chance that some entry
would not suit the legislation which is impugned. I shall, therefore, examine
the law relating to annuity deposits from this angle first.
The relevant provisions have been summarized
by my brother in great detail. The essence of these provisions, apart from the
machinery sections which are either supplementary to or fitted into, the scheme
of the Indian Income-tax Act 1961, is that a person, with an income above a
certain sum, may, if he so chooses and as an alternative to paying the full tax
due on his income, make an annuity deposit and earn some present partial relief
from taxation. It is not necessary to state the extent of the relief or the
extent of the deposit. This is the scheme in a nut-shell. Now it is undoubtedly
open to Parliament to give relief from a part of the income-tax the assesses
have to pay on the condition that a particular amount is put into an annuity
The deposit is not obligatory. Any person can
elect to pay the full tax and not take advantage of the scheme. The pith and
substance of the impugned provisions, therefore, rightly belong to the topic of
taxes on income. The annuity deposit is in lieu of some tax and the machinery
sections also take the aid of the machinery of the Indian Income-tax Act. As
the enforcement of the provisions is by the agency of the Income-tax
Department-and they are intimately connected with Income-tax-the provisions are
very appropriately included in the Income-tax Act. -No doubt the provisions for
the management of the annuity deposits deal with matters slightly out of place
in a pure taxing measure but our Constitution has not created a water-tight
compartment as is to be found in the Commonwealth of Australia Act. Our
Income-tax Act can reasonably contain provisions on incidental matters and the
management of annuity deposit under the scheme is such a matter.
It is argued that this is a case of
"borrowing" which is defined in Art. 366(4) to include the raising of
money by the grant of annuities, and "loan" is also required to be
construed accordingly. It is submitted that if money was to be raised by the
grant of annuities the action should have been by an Act giving effect to Art.
292. Article 292 reads :
"292. Borrowing by the Government of
The executive power of the Union extends to
borrowing upon the security of the Consolidated Fund 33 of India within such
limits, if any, as may from time to time be fixed by Parliament by law and to
the giving of guarantees within such limits, if any, as may be so fixed."
Borrowing under that Article is by executive action and it is on the security
of the Consolidated Fund of India. A similar power is granted to the Executive
of the State by Art. 293. This is not a legislative power except in so far as
law may be made to fix the limits of borrowing and to the giving of guarantees
within such limits. Otherwise it is a power for the exercise of the Executive.
Here the Annuity deposit is an alternative to
paying income tax and is a means of reduction in the amount of income-tax.
The provisions relating to it rightly came
under entry No.
82 of List I dealing with taxes on income.
The money so collected is returned with interest in equal installments spread
over ten years and the amount is taxable in the year of refund. The entry thus
There is no entry in List 11 which can be
said to take in the law relating to Annuity Deposits. Entry No. 30 (money lending,
and money lenders) has to be mentioned and rejected. As the subject of the annuity
deposit provisions is capable of being comprehended in the entry relating to
taxes on income do not feel called upon to invoke the aid of entry No. 97 by
assuming that no entry covers such provisions. This will be a fundamental error
in approach to such problems. The provisions are neither colourable nor
discriminatory. They apply to upper income groups and this does not lead to
discrimination. They are not colourable because, though called annuity
deposits, they only defer payment of tax on a part of the assessable income and
the name does not matter at all. Instead of charging income-tax on the amount
forthwith the amount is ordered to be kept in deposit with Government,
one-tenth being returned with interest every year. The returned amount then bears
An election once made is final.
I agree, therefore, that the petition be
dismissed with costs.