Appeal No 510 1963
Appeal by special leave from the judgment and order dated January 22 1960 of the Madhya Pradesh High Court in Misc
Petition No 35 of 1959
B Sen and I N Shroff for the appellant
K N Rajagopal Sastri and A G Ratnaparkhi for the respondent
April 22 1964
The judgment of the Court was delivered by SUBBA RAO J
This appeal by special leave raises the question whether the expression income tax in cl
c of sub r
2 of r 2 of Schedule I to the Madhya Pradesh Abolition of Proprietary Rights Estate Mahals Alienated Lands Act 1950 MP Act No 1 of 1951 hereinafter cal led the Act includes super tax
The facts are as follows The respondent was the zamindar of Bhadra Estate in Balaghat District of Madhya Pradesh
His estate was known as Bahela Zamindari consisting of 78 villages
The Act came into force on January 26 1951
Under the Act the proprietary rights of the zamindari vested in the State and he became entitled to compensation in respect of the said rights in the said villages under section 8 of the Act
The compensation was to be determined in ac cordance with the rules contained in Schedule I to the Act
Under r 8 of Schedule I the zamindar would be entitled to compensation at 10 times the net income
The net income would be calculated by deducting from the gross income inter alia the average of the income tax paid in respect of the income from big forest during 30 agricultural years preceding March 31 1951
On November 30 1951 the Com pensation Officer determined the compensation payable to the respondent at Rs 221330 12 6
In arriving at that figure he deducted not only the income tax payable by the respon dent but also the super tax and surcharge payable by him
The average of the income tax paid by him during the mateI 30 years was only Rs 3760 2 9 but if the average of the super tax and surcharge was included the average came 840 to Rs 7070 8 0
The result was that the net yearly income of the estate was reduced by Rs 3310 5 3 and compensation was paid to him on the basis of the amount so reduced
The respondent moved the Settlement Commissioner under section 15 of the Act for enhancement of the compensation but the Commissioner confirmed the order of the Compensation Officer
Thereafter the respondent filed an application in the High Court under articles 226 and 227 of the Constitution for quashing the order of the Compensation Officer
The High Court held on a construction of the relevant provisions
of the Act that super tax should not be taken into account while calculating the compensation payable to the respondent
The State of Madhya Pradesh has filed the present appeal against the order of the High Court
Mr Sen learned counsel for the State contends that the object of r 22c is to provide a method for ascertaining the net income of an estate that in that context there cannot be any justifiable distinction between income tax and super tax for both of them have inter alia to be deducted from the gross income to arrive at the net income and that the Legislature used the word income tax in its comprehensive sense so as to take in super tax
He adds that under the Income tax Act super tax is only an additional duty of income tax and therefore a part of it
Mr Rajagopala Sastri learned counsel for the respondent assessee argues that in construing a provision of an ex proprietary Act the Court will have to construe such a pro vision strictly and if so construed super tax cannot be in cluded in the expression income tax
He took us through the relevant provisions of the Income tax Act to support his contention that super tax is different in its origin description scope incidents and collection from the income tax
The question turns upon the correct interpretation of r 22c of the rules of Schedule I to the Act
The relevant provisions of the Act and the rule read Section 81 of the Act The State Government shall pay to every proprietor who is divested of proprietary rights compensation determined in accordance with the rules contained in Schedule 1
 Schedule I to the Act Rule 2
The net income of an estate or mahal in the Central Provinces shall be calculated by deducting from the gross income the sums under the following heads namely c the average of the income tax paid in respect of the income received from big forest during 841 the period of thirty agricultural years preceding the agricultural year in which the relevant date falls        Rule 8
1 The amount of compensation in the Central Provinces and in Berar shall be ten times the net income determined in accordance with the rules herein contained
The combined effect of the said provisions is that for the purpose of ascertaining the net income of an estate one of the deductible items is the average of the income tax paid in respect of the income received from the big forest
That average is ascertained on the basis of the income tax paid during the 30 agricultural years preceding the agricultural year in which the relevant date falls
The compensation payable is ten times the net income ascertained under the rules
The relevant date for the purpose of ascertaining the average is the date specified by notification by the State Government under section 3 of the Act for instance if the relevant date falls in the year 1951 the income tax paid during the years 1921 to 1951 will afford the basis for arriving at the average
To appreciate the distinction between the concepts of income tax and super tax a brief history of their incidents will not be inappropriate
Under the Income tax Act of 1886 the total income from various sources was not the criterion for assessment but the different sources alone were the basis for it
For the first time the 1918 Act introduced the scheme of total income for the purpose of determining the rate of tax
Under that Act several heads were enumerated under which the income of an assessee fell to be charged
The 1922 Act went further and enacted that loss under one head of income can be set off against the profit under another head
Till the 1922 Act super tax was separately levied
It was first introduced by the Super tax Act of 1917 and then it was replaced by the 1920 Act
Only in 1922 for the first time it was incorporated in the Income tax Act
Though both the taxes are dealt with by the same Act their distinctive features are maintained
As regards income tax in the words of a learned author section 3 charges the total income section 4 define its range section 6 qualifies it and sections 7 to 12 quantify it
 There are various other sections which provide the machinery for the ascertainment of the total income for assessment and recovery of tax
As regards super tax a separate chapter viz Ch
IX deals with it it comprises sections 55 to 58
Section 55 is the charging section for the purpose of super tax under that section In addition to the income tax charged for any year there shall be charged levied and paid for that year in respect of the total income of the 842 previous year   an additional duty of income tax in this Act referred to as super tax at the rate or rates laid down for that year by a Central Act
Section 56 says that for the purpose of super tax except in specified cases the total income shall be the total income as assessed for the purpose of income tax
Section 56A exempts from super tax certain dividends
Section 581 applies by reference to supertax certain provisions of the Act relating to the charge assessment collection and recovery of income tax
It would be seen from this Chapter that though super tax is described as an additional duty of income tax it is not incorporated in the income tax  its identity is maintained
A self contained chapter deals with the charge assessment collection and recovery of super tax
There are essential differences between the two taxes emanating not only from the express provisions contained in Ch
IX but also from the omission to apply the specified sections of the Act to the said tax
Successive Finance Acts also made a distinction between the two taxes
This is not the occasion to notice in detail the differences between the two taxes
It is enough to state that there are pronounced differences between the incidents of the twotaxes
But two relevant differences may be noticed namelyi though both the taxes are assessed on the total income ofa person the total income for the purpose of income tax is computed on the basis of income classified and chargeable under the different heads mentioned in section 6 of the Act whereas super tax is not concerned with the different heads but is payable on the total income so ascertained  and ii while super tax except in a few cases is payable by the assessee direct the income tax is payable by him direct as well as by deduction
While in the case of income tax by reversing the process the tax attributable to a particular source can be ascertained in the case of super tax no such process is possible as the said liability springs into legal existence only after the total income is ascertained
The only possible method by which the said tax may be split up is by working out the proportion of the tax payable by the assessee in respect of an income from a particular source on the basis of the ratio the said income bears to the total income
But this method is not sanctioned by the Act
It is not legally possible to predicate what particular part of the super tax is attributable to an income from a particular source for unlike in the case of income tax total income alone is the criterion and the income from different sources is not relevant
To illustrate super tax is now levied on income over certain level at present Rs 25000 
If A s total income is Rs 35000 made up of Rs 20000 from big forest and Rs 15000 from other sources what is the super tax attributable to the income from the big forest The answer is it is not possible to do so
843 With this background let us give a close look to the provisions of r 22c of Schedule I to the Act
The legislative intention is manifest from the express language used and also by internal evidence
With the knowledge that under the Income tax Act two separate duties namely in come tax and super tax are imposed the Legislature has used the expression income tax
If the intention was to refer to both the taxes it would have stated income tax and super tax
The mention of the one and the omission of the other is a sure indication of its intention
The qualification that income tax paid should have been in respect of the income received from the big forest neces sarily excludes super tax for under the Income tax Act no super tax is payable in respect of the income received from big forest but only in respect of the total income
As we have pointed out earlier it is not legally possible to disintegrate and allocate a portion of the super tax to the income attributable to the big forest
It is not paid in respect of the income from the big forest but is paid only in respect of the total income
If the contention of the appellant prevails though the income from big forest falls below the taxable income it will be deducted if in combination with the income from other sources the income goes up to the taxable level
In that event super tax not payable in respect of the income from big forest will have to be deducted
That apart the rules made under the Act do not provide for any machinery for allocating the super tax payable on the total income among the different sources
It is said that the same difficulties are present even in the case of income tax
Though income tax is also a tax on the total income of an assessee the Act as we have indicated earlier provides for computing the income under different heads and therefore it is not inappropriate to describe a particular tax as attributable to an income from a particular head but it would wholly be inappropriate to describe that a part of the super tax is payable in respect of an income from a particular source
The argument of Mr Rajagopala Sastri learned counsel for the respondent that the 30 years mentioned in the rule takes us back to a period when there was no super tax appears to be not sound for as we have stated earlier supertax was payable in one form or other from the year 1917
That apart if the income tax takes in super tax the nonexistence of super tax in a particular year does not make any difference in ascertaining the average for the income tax for that year will be the income tax without the addition of super tax
This circumstance is not therefore of much relevance and we exclude it from our consideration
844 The argument that if the Legislature intended not to exclude super tax from the gross income it would have expressly stated so in the rule is an attempt to put the shoe on the wrong foot
The proper approach particularly in the case of an exproprietary statute is to ask the question why the Legislature did not expressly mention super tax if it in tended to do so
The use of one of the two well understood expressions is on the other hand an indication that the Legislature provided for the deduction of the one used and not of the other omitted
The reason for the rule if it is legitimate to speculate appears to be that as it is concerned with the calculation of the net income from the estate after making certain deductions only those deductions which have a direct relation to that income are allowed
If the other construction prevails speculation would take the place of certainty and super tax not paid factually in respect of the income from big forest would have to be deducted
Such a construction defeats the purpose of the rule
Some of the decisions cited at the Bar may now be noticed
Lord Sumner pithily remarks in Brooks vs The Commissioner of Inland Revenue1  for super tax tax is another and a new tax none the less though it is an additional duty of Income Tax
 In Bates In re Selmes vs Bates2 a testator gave to his wife by his will such a sum in every year as after deduction of the income tax for the time being payable in respect thereof will leave a clear sum of pound 2000
 It was held that the wife was entitled to the pound 2000 free of income tax only and was not entitled to payment of any sum in respect of super tax
There the trustees were directed to pay the annuity after deducting the income tax in respect of that annuity
Rejecting the argument advanced on behalf of the wife that the said annuity should be free from super tax also Russell
J observed Now super tax was not a charge in respect of any particular annuity or sum but was a charge in respect of the recipient s whole income and was not a matter with which the trustees would be charged or concerned at all and in his opinion what the testator had done was to give the widow the yearly sum of pound 2500 clear of all deductions for which the trustees were accountable but that did not include super tax which she must pay herself 119l4 7 T C 2 3 6 2 5 section 2  159 160 161 845 The learned Judge proceeded to state No super tax is really payable in respect of  this sum
 It is true that the said judgment turned upon the provisions of a particular will but the reasoning is helpful
There income tax was deductible in respect of the sum bequeathed here income tax is deductible in respect of the income re ceived from big forest
As super tax is not a charge in respect of the income from big forest on the parity of reasoning it shall be held that the word income tax used in cl
c of r 22 of Schedule I to the Act excludes super tax
In Reckitt In re Reckitt vs Reckitt1 a fund was bequeathed to trustees upon trust for investment and to pay out of the income of the investments the annual sum of pound 5000 free of income tax during the life of the annuitant
The Court of Appeal held that the annuitant was entitled to have the sum paid to her without deduction on account of super tax and that the trustees must pay the super tax payable in respect of that sum out of the income of the fund
The conclusion turned upon the provisions of the will
Lord Hanworth MR distinguished the decision in Bates In re Selmes vs Bates2 on the ground that Russell J founded his judgment upon the reference to deductions and also upon the direction to the trustees that specified sum should be paid after deduction of income tax in respect thereof and proceeded to observe that in the case before them no reference was made to the system or the power of the trustees to make deductions 
and that it was simply that a total sum in each year was to be paid free of income tax
That decision may be right or wrong on the construction of the will before the Court of Appeal but the features which distinguished Bates case from the decision in Reckitt s case are also present in the case before us now
Here also the rule empowers the prescribed authority to deduct from the gross income incometax paid in respect of the income received from big forest
The earlier decision is more in point to the present case than the later
Be that as it may the English decisions on the construction of will are not of much help in construing the express provisions of r 22c of Schedule I to the Act they shall be construed on their own terms
Having regard to the terms of the rule we have come to the conclusion that in come tax does not take in super tax
In the result the appeal fails and is dismised with costs Appeal dismissed


Summary:
The respondent was an owner of an estate in Madhya Pradesh
Under the provisions of the Madhya Pradesh Abolition of Proprietary Rights Estates Mahals Alienated Lands Act 1950 the respondent s estate was vested in the State and he became entitled to compensation
The compensation was to be paid at the rate of ten times the net income
The net in come would be calculated by deducting from the gross income inter alia the average of the income tax paid in respect of the income from big forest during 30 agricultural years proceeding March 31 1951
In calculating the net income the Compensation Officer deducted not only income tax but also super tax and the respondent appealed to the Settlement Commissioner against the deduction of super tax
On the rejection of the appeal the respondent filed a writ petition in the High Court and the High Court held that on a construction of the various provisions of the Act it was wrong to deduct the super tax while calculating the compensation payable to the respondent
The appellant filed this appeal on special leave granted by this Court
It was contended on behalf of the appellant that the object of the r 22 c of Schedule I to the Act is to provide a method for ascertaining the net income of an estate and therefore there cannot be any distinction between income tax and super tax and the expression income tax has been used comprehensively to include super tax also
The contention on behalf of the respondent was that from a historical point as well as from the provisions of the Act it is seen that income tax and super tax were distinct and separate and the former does not include the latter
Heldi There are two essential differences between income tax and super tax
They are 1 though both the taxes are assessed on the total income of a person the total income for the purpose of income tax is computed on the basis of income classified chargeable under the different heads mentioned in section 6 of the Income tax Act whereas super tax is not concerned with the different heads but is payable on the total income so ascertained and 2 while super tax 1 except in a few cases is payable by the assessee direct the income tax is payable by him direct as well as by deduction
iiExamining the provisions of r 22c Schedule I of the Act it is evident that with the knowledge that under the In come tax Act two seperate duties namely income tax and super tax are imposed the Legislature has used the expression income tax
If the intention was to refer to both the taxes it would have stated income tax and super tax
The mention of the one and the omission of the other is a sure indication of its intention
The qualification that income tax paid should have been in respect of the income received from the big 839 forests necessarily excludes super tax for under the Income tax Act no super tax is payable in respect of the income re ceived from big forest but only in respect of the total income
iiiHaving regard to the terms of r 22c of Sche dule I to the Act it is clear that income tax does not take in super tax
Case law reviewed
Brooks vs Commissioner of Inland Revenue  Bates
In re Salmea vs Bates and Reckitt vs Reckitt