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PETITIONER: MR.  JUSTICE DEOKI NANDAN AGARWALA

       Vs.

RESPONDENT: UNION OF INDIA & ANR.

DATE OF JUDGMENT:       05/05/1999

BENCH: B.N.Kripal,S.P.Bharucha,S.R.Babu, Syed Shah Mohammed Quadri

JUDGMENT:

     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 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

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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.