Balaji V. Income-Tax Officer, Special
Investigation Circle [1961] INSC 235 (4 August 1961)
SUBBARAO, K.
GAJENDRAGADKAR, P.B.
HIDAYATULLAH, M.
SHAH, J.C.
DAYAL, RAGHUBAR
CITATION: 1962 AIR 123 1962 SCR (2) 983
CITATOR INFO :
R 1962 SC1406 (27) F 1962 SC1563 (10) F 1962
SC1621 (45,165) R 1965 SC 342 (25) R 1965 SC1375 (13,35,40) R 1965 SC1862 (10)
RF 1967 SC 517 (2) R 1971 SC 792 (4) RF 1972 SC 425 (25) RF 1973 SC1056 (3) R
1984 SC 420 (45)
ACT:
Income Tax-Computation of total income of
individualInclusion of income of wife and minor children from partnership--Constitutional
validity of enactment-Indian Income-tax Act, 1922 (11 of 1922), s. (16) (3) (a)
(i) and(ii)Constitution of India, Arts. 14, 19 (1) If) & (g).
HEADNOTE:
The petitioner and his wife started business
in partnership and admitted their three minor sons to it, in computing the
total income of the petitioner for the purpose of assessment 984 the Income-tax
Officer included the share of the income of the wife and three minor sons
unders 16(3)(a) (i) and (ii) of the Indian Income Tax Act, 1922. The petitioner
moved the Supreme Court under Art. 32 of the Constitution challenging the
constitutionality the said provisions on the grounds, (1) that they were ultra
vires the Legislature under Entry 54 of the Federal Legislative List of the
Government of India Act, 19351,and (2) that they contravened the provisions of
Arts. 14 and 19 (1) (f) and (g) of the Constitution, Held, that the Entries in
the Legislative Lists are not powers but fields of legislation and the widest
import and significance should be attached to them. Thus interpreted, there
could be no doubt that Entry 54 of the Federal Legislative List must cover such
legislation as the impugned provision intended to prevent the evasion of tax.
Sardar Baldev Singh v. Commissioner of
Income-tax, Delhi and Ajmer. (1961) 1 S.C.R. 482, referred to.
The two tests of permissible classification
tinder Art. 14 of the Constitution, as held by this Court, were (1) that the
classification must be founded on an intelligent differentia and (2) that the
differentia must be reasonably connected with the object of the legislation.
So judged, it could not be said that the
differentia on which the 'impugned provision founded its, classification had no
rational relation to its object, namely, the prevention of the evasion of tax.
The impugned provision did not therefore, violate Art. 14 of the Constitution.
It was not appropriate to apply American
decisions dealing with evasion of taxes to similar cases in India where the
conditions were entirely different, Since the Legislature cognizant of the
widespread evasion of taxes in this country, enacted the law for its
prevention, it would not be proper for this court, in the absence of
counterbalancing circumstances, to hold on the analogy of American decisions
that there was no need for such legislation.
Albert A. Hoeper v. Tax Commissioner of
Wisconsin (1931) 76 L. Ed. 248, distinguished and held inapplicable.
B. M. Amina Umma v. Income-tax Officer,
Kozhikode, (1954) 26 I.T.R. 137, approved.
Nor did the impugned provision violate Art.
19(1) (f) and (g) of the constitution.
A tax authorised by law may be questioned as
offending the fundamental freedom under Art. 19 of the Constitution.
985 A tax law, like any other law, must also
satisfy that (i) the appropriate legislature was competent to enact it and (ii)
that it did not infringe any of the fundamental rights.
Md. Yasin v. The Town Area Committee,,
Jalalabad, (1952) S.C.R. 572, Himmattai Harilal Mehta v. State Of Madhya
Pradesh, (1934) S.C.R. 1122, K. K. Kochuni v. State of Madras, (1960) 3 S.C.R.
887 and K. T. Moopil Nair v. State of Kerala, (1961) 3 S.C.R. 77, referred to.
Even so, the restriction imposed by the
impugned provision must be held to be reasonable. Although the mode of taxation
it provided might be a little hard on a husband or a father in the case of
genuine partnerships, that was sufficiently offset by the resulting benefit to
the public as also by the fact that the additional payment of tax made by the
husband or the father on the income of the wife or minor children would
ultimately be borne by them in the final accounting between them.
State of Madras v. V. G. Row., (1952) S.C.R.
597, referred to.
ORIGINAL JURISDICTION : Petition No. 240 of
1960.
Petition under Art. 32 of the Constitution of
India for the enforcement of Fundamental Richts.
T. M. Thakar, S. N. Andley and Rameshwar
Nath, for the petitioner.
H. N. Sanyal, Additional Solicitor-General of
India, K. N. Rajagopal Sastri and P. D. Menon, for the respondents.
1961. August 4. Judgment of the Court has
delivered by SUBBA RAO, J.This writ petition filed under Art. 32 of the
Constitution raises the question of' the constitutional validity of: S. 16(3)(a)(i)
of the Indian Income-tax Act, 1922 (Act XI of 1922), (hereinafter called the
Act).
The facts are not in dispute and may be
briefly narrated.
The petitioner., Balaji, his six soils 986
and his wife, by name Godawaribai, constituted a Joint Hindu family. The family
was a trading family and it had, besides business in money lending,
considerable agricultural lands.
On November 23, 1946, two of his sons became
divided from the family. In the year 1951, through the intervention of
mediators the other members of the family were also divided and another major
member started a separate business on his own. Thereafter, the petitioner and
his wife formed themselves into a partnership to carry on their business and
admitted their three minor sons to the benefits thereof On September 22, 1952,
a partnership deed was executed giving an equal share to each of the partners.
On the basis of the partnership deed, in respect of the assessment year 1952-53
the petitioner filed two applications before the Income-tax Officer, Wardha,
one under s. 25-A of the Act for recognizing the partition, and the other under
s. 26-A for registration of the firm. Both the applications were finally
ordered by the Income-tax Appellate Tribunal, Bombay, by its order dated
September 3, 1958, that is, the partition was recognized and the firm was
granted registration. For the assessment years 1953-54 and 1954-55 also, the
Income-tax Department registered the firm under s. 26-A of the Act. The
assessment proceedings in respect of the said three years are pending before
the concerned Income-tax authorities. For the assessment year 1955-56 also, the
Income-tax Officer allowed the registration of the firm, but determined the
total income of the petitioner at Rs. 2,44,625 as against the total income
returned by him at Rs. 58,232. The disparity arose because, while the assessee
excluded from his total income the income of the partnership falling to the
shares of his wife and three minor sons, the Income-tax Officer included the
share income of his wife and three minor sons in 'the said bussiness in the
total income of the petitioner, The petitioner, by the present petition, 987
challenges the constitutional validity of s.16(3)(a) (i) and (ii) of the Act,
and prays for a declaration that the said provisions are ultra vires the
Constitution and for the issue of a writ of certiorari quashing the assessment
order dated March 15, 1960, and for the issue of a writ of prohibition
restraining the respondents from including the share income, of his wife and
minor children from the partnership firm in his total income and taxing the
same in his hands.
The first question raised is whether the
appropriate Legislature had the competence to enact s. 16(3)(a)(i) and (ii) of
the Act. It would be convenient at the outset to read the relevant part of the
said section.
Section 16. (3) In computing the total income
of any individual for the purpose of assessment, there shall be included(a)so
much of the income of a wife, or a minor child of such individual as arises
directlyor indirectly(i) from the membership of the wife in a firm of which her
husband is a partner ;
(ii)from the admission of the minor to the
benefits of partnership in a firm of which such in-dividual is a partner.
Section 16 provides for the computation of'
total income of a person and describes what sums are to be included and what
sums are to be excluded there from. Under sub-cls. (i) and (ii) of el. (a) of
sub-s.. (3) of the said section, the shares in the profits of the firm received
by the wife and the minor children shall be included in the total income of the
individual. Under the said sub-clauses an individual is made, liable to pay tax
in respect of the income of' his wife and minor children, 988 though the said
liability is confined to the circumstances mentioned therein.
Learned counsel for the petitioner contended
that Entry 54 in the Federal Legislative List of the Government of India Act,
1935, did not confer on the Legislature any power to tax A on the income of B
and, therefore, the sub-section was ultra vires the Legislature. Entry 54 of
the Federal Legislative List ran : "Taxes on income, other than
agricultural income". The said Entry is identical with item 82 of List I
of' the Seventh Schedule to the Constitution.
The argument is that income-tax is a tax
imposed upon a person in relation to his income and, therefore, A can only be
taxed on his income and not oil the income of B Learned counsel for the
respondents, oil the other hand, would contend that the express terms of the
Entry did not restrict the legislative power to tax only the income of the
person assessed, that what could be taxed under that Entry was "income"
and, therefore, nothing prevented the legislature from imposing the incidence
of the tax Oil a person other than the person whose income was to be assessed.
Alternatively, he would make. a distinction between the taxability of the
income and the machinery for its collection and contend that though the income
of the wife and the minor sons was only' taxable, there was nothing illegal in
imposing the immediate incidence on the father, as there was sufficient
intimate nexus between the individual, his wife and minor sons, doing business
in partnership, leaving the ultimate liability inter se to be settled between themselves.
This question was directly raised in B. M.. Amina Umma v. Incometax Officer,
Kozhikode (1) and was answered in favour of the Income-tax Department. The same
question was posed before this Court in Sardar Baldev Singh v. Commissioner of
Income Tax, Delhi and Ajmer (2 ) and was left (1) (1954) 26 I.T.R. 137.
(2) (1961) 1 S.C.R. 482, 493.
989 open. A final decision by this Court oil
such an important question at the earliest point of time is highly desirable,
but, with some reluctance are leaving open this question once again, as the
petition call be satisfactorily disposed of on a narrower basis.
It is well settled that the Entries in the
Lists are not powers but are only fields of legislation, and that widest import
and significance must be given to the, language used by Parliament in the
various Entries. Sarkar, J., speaking for this Court, observed in Sardar Baldev
Singh's Case thus :
" So entry 54 should be read not only as
authorising the imposition of a tax but also as authorising all enactment which
prevents the tax imposed being evaded. If it were not to be so read, their the
admitted power to tax a person on his own income might often be made
infructuous by ingenious contrivances." This decision holds that the said
Entry can sustain a law made to prevent the evasion of tax.
The short question, therefore, is whether
s.16 (3)(a)(1) and (ii) is a provision made by the Legislature to prevent
evasion of tax. Under the relevant provision of the Incometax Act, if a firm
its registered, the share of each partner in the profit of the firm would be
added to his other income and changed as part of his total income. After 1956,
the position is the same except in one regard with which we are not now
concerned. This provision ",as intended for the.
benefit of partners of a business, for it
made them liable only to pay tax on their own income. But it gave an effective
handle to evade, taxation in another direction. A husband or a father could
nominally take his wife or his minor SODS in partnership with him so that tax
burden (1) (1961) 1 S.C.R. 482, 493.
990 might be lightened, for, if the income
was divided between a number of people, the income derived by an individual
therefrom might fall under the limits of taxable income or under a less onerous
slab. This device enables an assessee to secure the entire income of the
business but at the same time to evade income-tax which he would have otherwise
been liable to pay. The Income-tax Enquiry Commission of 1936 made certain
recommendation to prevent evasion of tax in such cases. The Legislature
accepted those recommendations and the loopholes were sought to be plugged by
enacting the said sub-section. Sub-section (3)(a)(1) and (ii) was therefore
enacted for preventing evasion of tax and was well within the competence of the
Federal Legislature.
The constitutional validity of the said
provision was next questioned on the ground that it violated the doctrine of
equality before the law enshrined in Art. 14 of the Constitution. Under Art.
14, "The State shall not deny to any person equality before the law or the
equal protection of the laws within the territory of India." But decisions
of this Court permitted classification if there was reasonable basis for the
differentiation. It was held that what Art.
14 prohibited was class legislation and not
reasonable classification for the purpose of legislation. Two conditions were
laid down for passing the test of permissible classification, namely,(i) the
classification must be founded on an intelligible differentia which
distinguishes persons or things that are grouped together from others left out
of the group, and (ii) that the differentia must have rational relation to the
object sought to be achieved by the statute in question. Under the impugned
sub-section, an individual is taxed on the income of his wife or his minor
children., if he carries on business in partnership with his wife or if he
admits his minor sons to the benefits of the partnership, whereas an
individual, if he carries on business in: partnership 991 with a third party,
whether a man or a woman, or even with his major children, or if he and his or
children carry on business separately, will be liable only to pay tax on his
share of the partnership income, that is, for the purpose of' this subsection,
the former is put in a category different from the latter. It cannot be said
that there is no differentia between the two groups; but what is contended is
that the said differentia has no rational relation to the object sought to be
achieved by the statute in question. It was asked how, from the standpoint of
imposition of tax, the difference between an individual and his wife doing
business in partnership, and between an individual and his wife doing business
separately and an individual doing business hi partnership with his wife and an
individual doing business in partnership with a third party, male or female,
and between an individual who has admitted his minor children to the
partnership business and an individual who is doing business in partnership
with his major children or outsiders, would have any reasonable basis. This
argument ignores the object of the legislation. We have held that the object of
the legislation was to prevent evasion of tax.
A similar device would not ordinarily be resorted
to by individuals by entering into partnership with persons other than those
mentioned in the sub-section, as it would involve a risk of the third-party
turning round and asserting his own rights. The Legislature, therefore,
selected for the purpose of classification only that group of persons who in
fact are used as a cloak to perpetrate fraud on taxation.
It was then said that there might be genuine
partnerships between an individual and his wife and, therefore, there is no
reasonable relation between the classification and the object sought to be
achieved, at any rate to the extent of those, genuine cases. But there is no
classification between genuine and non-genuine cases: the classification is
between cases of partnership between husband, wife and/or minor children,
whether genuine or not, and partnerships between others. In demarcating a
group, the net was cast a little wider, but it was necessary, as any further
sub classification as genuine and Don-genuine partnerships might defeat the purpose
of the Act. Strong reliance is. placed upon the decision of the Supreme Court
of America, in Albert A. Hoeper v. Tax Commissioner of Wisconsin (1) and it is,
therefore, necessary to consider it in some detail. There, the appellant
married a widow. Both the parties had separate incomes and made separate
returns.
Under the relevant tax Act, the incomes of
the wife were added to the-income of the husband for the purpose of taxation.
The result was to increase the rate of the appellant's income-tax and to charge
him with a tax otherwise payable by his wife. It was contended that the said
law deprived the tax-payer of the due process and equal, protection of the law.
Roberts, J., who expressed the majority view, accepted the contention and
struck out the law. The learned Judge observed thus :
"We have no doubt that, because of the
fundamental conceptions which underlie our system, any attempt by a state to
measure the tax on one person's property or income by reference to the property
or income of another is contrary to due process of law as guaranteed by the
14th Amendment. That which is not in fact the taxpayer's income cannot be made
such by calling it income." The Court of Appeal in that case assigned two
reasons for sustaining the provisions one was that the provisions under attack
were necessary to prevent frauds and evasions of tax by married persons, and,
the other was that it was (1) (1931) 76 L. Ed. 248, 251.
993 a regulation of marriage. The
first-reason was not accepted by the Supreme Court on the ground that the
claimed necessity could not justify the otherwise unconstitutional exaction ;
and the second reason was rejected for the reason that it could hardly be
claimed that a mere difference in social relations so altered the taxable
status of one receiving income as to justify a different measure for the tax.
Holmes, J., in his dissenting judgment, justified his view on the ground that
the statute was the outcome of thousand years of history indicating that
husband and wife were one and also for the reason that it had a tendency to
prevent tax evasion. Prima facie the majority view supports the contention of
learned counsel for the petitioner, but a deeper scrutiny reveals fundamental
differences between that decision and the present case. There, there was no
question of any partnership between husband and wife, and the income of the
wife was added to that of the husband with the result that he had to pay not
only increased rate on his income but also a portion of the tax otherwise
payable by wife ; in the present case, the impugned provisions do not impose
any such general liability but confine it only to a case where the husband
takes his wife in partnership. There is a greater scope for fraudulent evasion
by constituting fictitious.
partnership along with one's wife and minor
children than in a case of separate income of the spouses derived from
different sources. That apart, the present social and economic position of
women in India as compared with their compeers in America, even as it existed
in 1931, is so low that it would be inappropriate to apply the decision made in
America to a similar case arising in India. A wife in India, particularly if
she be illiterate large majority of them are illiterate-would ordinarily be in
economic matters a tool in the hands of her husband. Many things are done in
her 994 name without her knowledge of the same. When the Legislature of this
country, which is assumed to know the conditions of the people and their
requirements, with the awareness of this particular widespread fraudulent
device in the matter of evasion of taxes, made a law to prevent the said fraud,
it is difficult for this Court in the absence of any counterbalancing
circumstances to hold, on the analogy drawn from American decisions, that the
need for such a law is not in existence. On the contrary there is a direct
decision of the Madras High Court in B. M. Amina Umma v. Income Tax Officer,
Kozhikode (1) sustaining the said provision on the ground of reasonable
classification.
Rajagopalan, J., speaking for the division
bench, after considering the relevant decisions on the subject, observed thus :
"The reasonableness or otherwise of a
classification has to be decided with reference to all the circumstances of the
case including the social and economic structure prevalent in the area where
the taxing statute is in operation.......... An attempt to prevent by
legislation an evasion of just tax liability and the necessary classification
to give effect to that object cannot, in our view, be termed
unreasonable." With respect we, give our full assent to the said
observations. We, therefore, reject this contention.
The next attack on the validity of the
provisions is based upon Art. 19 (1) (f) and (g) of the Constitution. The said
constitutional provisions read :
Art. 19(1) : All citizens shall have the
right(f) to acquire, hold and dispose of property; and (1) (1954) 26 I.T.R.
137,150.
995 (g) to practise 'any profession, or to
carry on any occupation, trade or business.
It was argued that as the husband is
statutorily made to pay certain amount as tax on the income of his wife, to
that extent, he is deprived of his property by the State action and, therefore,
his fundamental right under s. 19 (1) (f) is infringed. The impugned statutory
provision, the argument proceeds, is an unreasonable restriction on the said
right, as the husband is, compelled 'to pay tax on the income of his wife and
children who are in law distinct legal persons.
The learned Additional Solicitor-General
broadly contended that a tax imposed by authority of law cannot be questioned
on the ground that the law infringes the provisions of Art.
19 of the constitution. We cannot see any
justification for this contention in any of the constitutional provisions.
The relevant provisions of the Constitution
read :
Art. 265 : No tax shall be levied or
collected except by authority of law.
Art. 13 (1) : All laws in force in the
territory of India immediately before the commencement of this Constitution, in
so far as they are inconsistent with the provisions of this Part shall, to the
extent of such inconsistency, be void.
(3) In this Article, unless the context otherwise
requires,(a) 'law' includes any Ordinance, order, bye-law, rule, regulation,
notification, custom or usage having in the territory of India the force of law
(b)"law in force' includes laws passed or made by a Legislature or other
competent authority in the territory of India before the 996 commencement of
this Constitution and not previously repealed, notwithstanding that any such
law or any part thereof may not be then in operation either at all or in
particular areas." A combined and plain reading of the said provisions
makes it abundantly clear that a law which is inconsistent with any of the
provisions of Part III is void. It cannot be denied that a law providing for
levy and collection of taxes is a law within the meaning of Part III of the
Constitution, and therefore it must stand the test laid down by Art. 13 of the
Constitution. The 'law' in Art. 265 of the Constitution must be a valid law. A
law to be valid must not only be one passed by the Legislature in exercise of a
power conferred on it, but must also be one that does not infringe the
fundamental rights declared by the Constitution. When a licence fee was imposed
by a municipality under a bye-law framed in excess of the power conferred on it
by the provisions of the U. P. Municipalities Act, this Court in Mohammad Yasin
v. The Town Area Committee, Jalalabad (1) held that the enforcement of the said
bye-law against a citizen constituted an infringement of his right under Art.
19 (1)(g) of the Constitution. Where a State
sought to impose sales-tax in exercise of a power conferred under a provision
which was ultra vires the State Legislature, this Court held in Himmatlal
Harilal Mehta v. The State of Madhya Pradesh (2) that a threat by the said
State to realise tax from the assesse without the authority of law by using
the.
coercive machinery of the impugned Act was a
sufficient infringement of his fundamental right under Art. 19(1)(g) of the
Constitution. The same principle must necessarily apply even in a case where
the law imposing a tax is void as offending the fundamental rights under the
Constitution.
This (1) (1952) S.C.R. 572.
(2) (1954) S.C.R. 1122.
997 Court in Kavalappara Kottarathil Kochuni
&Moopil Nair v. State of Madras (1), after considering the earlier
decisions observed thus :
"It is, therefore, manifest that the law
must satisfy two tests before it can be a valid law, namely, (1) that the
appropriate legislature has competency to make the law ; (2) that it does not
take away or abridge any of the fundamental rights enumerated in Part III of
the Constitution." Section 16 (3)(a) of the Act must, therefore, pass both
the tests and if it violates any of the provisions of Art. 19, to the extent it
is inconsistent with the said provisions, it will be void. This view is in
consonance with that expressed by this Court in Kunnathat Thathunni Moopil Nair
v. The State of Kerala (2). There, the petitioners impugned the
constitutionality of the Travancore-Cochin Land Tax Act, XV of 1955, as amended
by the Travancore-Cochin Land Tax (Amendment) Act, X of 1957, and Sinha, C. J.,
speaking for the Court held that the Act was void as infringing not only Art.
14 of the Constitution but also Art. 19 (1) (f) thereof. The learned Chief
Justice, after considering the relevant provisions of the Act and having regard
to the unreasonable nature of the restrictions, came to the conclusion that the
provisions of the Act were unconstitutional viewed from the angle of the
provisions of Art. 19 (1)(f) of the Constitution.
We cannot, therefore, accept broad contention
of the learned Additional Solicitor-General that a tax law cannot be questioned
on the ground that it infringes Art. 19 of the Constitution.
Even so the learned Additional
Solicitor-General contended that the provisions of (1) (1960) 3 S.C.R. 887, 91
1.
(2) (1961) 3 S.C.R. 77.
998 s. 16 (3) (a) (1) and (ii) of the Act
constituted only reasonable restrictions on the exercise of the rights
conferred under Art. 19(1)(f) and (g) of the Constitution, in the interest of
the general public.
Learned counsel for the petitioner argued
that the restrictions are not reasonable for the following reasons (1) the husband
is made to pay tax on the income which his wife derived from the business, that
is, a tax is levied on one person on the income of another ; (2) such an
imposition 'not only prevents a husband from taking his wife as a partner in
his business but also prevents a wife, who has got a business 'of her own, from
taking her husband as a partner in the business ; (3) the husband has to pay a
tax at a rate higher than that he would have to pay if the income of the wife
was not added to his income ; (4) the same situation is created inter se
between a parent and his minor children vis-a-vis their joint business.
Learned, counsel, therefore, contended that the provisions prevented the honest
pooling of resources of the members of a family so intimately connected with
each other to the detriment of the family prosperity, and that it amounted to
an unreasonable restriction on the said fundamental rights.
There is some plausibility in this argument,
but if an overall picture of the situation is taken, the reasonableness of the
restrictions will be apparent. In the State of Madras v. V. G. Row (1)
Pattanjali Sastri, C. J., lays down the following test of reasonableness
"The nature of the right alleged to have been infringed, the underlying
purpose of the restrictions imposed, the extent and urgency of the evil sought
to be remedied thereby, the disproportion of the imposition, the prevailing
conditions at the time, should all enter into the judicial verdict." So
judged, can it be said that the restrictions imposed (1) (1952) S.C.R. 597.
999 under the impugned provisions are not
reasonable? The object sought to be achieved was to prevent the prevalent
abuse, namely, evasion of tax by an individual doing business under a
partnership nominally entered with his wife or minor children. The scope of the
provisions is limited only to a few of the intimate members of a family who
ordinarily are under the protection of the assessee and are dependants of him.
The persons selected by the provisions, namely, wife and minor children, cannot
also be ordinarily expected to carry on their business independently with their
own funds when the husband or the father is alive and when they are under his
protection. Doubtless some of the said partnerships may be genuine and the wife
or minor children may have contributed capital to the business; but the
provisions do not in any way affect their rights and even the liability inter
se between the husband and the wife or the minor children, as the case may be,
in respect of the tax paid. It is true that in computing the total income of an
individual for the purpose of assessment, their income in their capacity as
partners shall be included in the income of the individual; but the section
doer, not prevent the husband or the father, as the case may be, from debiting
against them in the partnership accounts that part of the tax referable to the
share or shares of their income. It may be that a father or a husband may have
to pay tax at a higher rate than ordinarily he would have to pay if the addition
of the wife's or children's income to his own brings his total income to a
higher slab. But it may not necessarily be so in a case where the income of the
former is not appreciable ; even if it is appreciable, he can debit a part of
the excess payment to his wife and children. In short, the firm, though
registered, would be treated as a distinct unit of assessment, with the
difference that, unlike in the case of a registered firm, the entire income of
the unit is added to the personal income of the father or the husband 1000 as
the case may be. This mode of taxation may be a little hard on a husband or a
father in the case of genuine partnership with wife or minor children, but that
is offset, to a large extent, by the beneficent results that flow there from to
the public, namely, the prevention of evasion of income-tax, and also by the
fact that, by and large, the additional payment of tax made on the income of
the wife or the minor children will ultimately I be borne by them in the final
accounting between them. In these circumstances, we cannot say that the
provisions of s. 16(3) of the Act impose an unreasonable restriction on the
fundamental rights of the petitioner under Art. 19(1)(f) and (g) of the
Constitution.
In the result, the petition fails and is
dismissed with costs.
Petition dismissed.
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