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CASE NO.: Appeal (civil)  411 of 1982

PETITIONER: JUSTICE DEOKI NANDAN AGARWALA

RESPONDENT: UNION OF INDIA & ANR.

DATE OF JUDGMENT: 04/05/1999

BENCH: S.P.BHARUCHA & B.N.KIRPAL & S.RAJENDRA BABU & S.S.M.QUADRI & M.B.SHAH

JUDGMENT: JUDGMENT

DELIVERED BY: S.P.BHARUCHA, J.     

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.  The  contention having been rejected both by the I.T.O. and  in  appeal,  a special leave petition was filed.   Leave to  appeal was  granted and on 19th April, 1983  the  following  four  questions were  referred by two learned Judges  to  a  Constitution Bench:          1.   Whether the salary of a Judge of the High  Court  of  a  State  payable  under  cl.(1) of Art.   221  of  the  Constitution  and the salary of a Judge of the Supreme Court  payable  under cl.(1) of Art.  125 is taxable by a law made  by  Parliament under  Entry  82 of List I  of  the  Seventh  Schedule.          2.   Whether the expression Rupees in Part D of  the  Second Schedule  which stipulates the sums 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  and  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 cl.(2) of Art.   125 and cl.(2) of Art.  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 these  provisions  as there appears to be no express law  made  by

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Parliament for that purpose.          4.  Whether the salary of a Judge of the Supreme Court  payable under cl.(1) of Art.  125 or the salary of a  Judge  of  the High Court of a State payable under cl.(1) of  Art.  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 S.14 of the Income Tax 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 consideration.  The third question, it is  said  by learned counsel for the appellant, was raised suo moto 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 Judge and a Supreme Court  Judge  was liable to income tax prior to 1st April 1986.  It  must  be  stated  here that it is not  disputed that,  with  effect from 1st April, 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  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  Supreme  Court  Judge  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  mind,  there is a misconception here.  It is true that High  Court  and 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 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.  

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