Judgement

SHAH, J. : The petitioner who is a trader at Meerut was ordered by the Income-tax Officer, D-Ward, Meerut, to pay Rupees 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 Income-tax Act is unconstitutional and is otherwise violative of the fundamental right guaranteed by Art. 14 of the Constitution.

2. 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 containings Ss. 280-A to 280-X was that Chapter tax-payers 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 tax-payers, 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-O of the Act. A tax-payer 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 co-operative society), and

(v) an artificial juridical person referred to in sub-clause (vii) of Cl. (31) of S 2 of the Income-tax Act (other than a corporation established by a Central, State or Provincial Act).

All non-residents and all companies and corporations and co-operative 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 tax-payer 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 280-B 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, play-wrights, artists, musicians and actors are permitted to make at their option, deposit upto 25 per cent of the amount dervied 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 per cent of the amount of