I.-T. AS. NOS. 1637 AND 1634' OF 1983-84, DECIDED ON 8TH MAY, 1984. Versus I.-T. AS. NOS. 1637 AND 1634' OF 1983-84, DECIDED ON 8TH MAY, 1984.
ORDER
1. MIAN ABDUL KHALIQ (MEMBER). -The only issue involved in these two departmental appeals is whether in a jeweller's case surcharge is leviable on taxable income or on the entire assessed income.
2. The facts in brief are that the assessee, an individual, derived income as a jeweller. For the charge years 1980-81 and 1981-82 the assessee's net income estimated by the I. T. O. was maintained in appeal. Jeweller s surcharge was levied on the entire assessed i.e. Rs. 12,700 and Rs. 12,800. On appeal, the learned A. A. C. directed that surcharge was leviable at an income exceeding Rs. 12,000. Against that decision, the department feels aggrieved.
3. At the outset it is pertinent to point out that these appeals have been laid for hearing before us to receive the issue of two different view expressed by a learned Single Bench of the Income-tax Appellate Tribunal. In I. T. A. No. 2018 of 1979-80 decided on 28-2-1982, it was held :-
4. "What has been excepted by the law is person whose income does not exceed Rs. 12,000 and not the income. The law provides that any person whose total income exceeds Rs. 12,C00 a surcharge is to be levied at his total income."
5. Thereafter the following different view was taken in I. T. As. Nos. 2730, 2731 and 2732 of 1981-82 dated 5-2-1983 :--
6. "From the perusal of the above definition it is obvious that the surcharge is to be leviable under clause (c) on taxable income only which means income in excess of Rs. 12,000."
2. Before dealing with the contentions of the parties and discussion thereon, we would like to bring on record the provisions of law relevant to the issue involved.
7. Under subsections (43) and (44) of section 2 of the Income-tax Ordi nance, 1979, (hereinafter referred to as the `Ordinance') "tax" and "total income" is defined as : .
8. Subsection (43):
9. "Tax" means income-tax, super-tax, surcharge and additional tax chargeable or payable under this Ordinance, and includes any penalty, fee or other charge or any sum or amount leviable or payable under this Ordinance:
10. Subsection (44):
11. "Total income" means the total amount of income referred to section 11 computed in the manner laid down in this Ordinance; and includes any income which, under any provision of this Ordinance; is to be included in the total income of an assessee."
12. Sub-clause (a) of Proviso to Clause A of First Schedule of the Ordinance provides:---
13. "No income-tax shall be payable by an assessee where his total income does not exceed its. 12,000."
14. This figure of Rs. 12,000 was latter on substituted by Rs. 18,000. Sub-clause (4) of para. 8 of Part IV of the First Schedule defines the:
15. "Taxable income" means the total income of the assessee as diminished by an allowance of R3. 12,000."
16. Under the Ordinance, section 10 provides the levy of surcharge in addition to income-tax charged for any year. Relevant provision is as under :--
17. Subsection (2)
18. "Subject to the provisions of this Ordinance, the total income of any person shall, for the purposes of super-tax and surcharge, be the total income as assessed for the purposes of income-tax, and whereas an assessment has become final and conclusive for the purposes of income-tax for any year, the assessment shall also be final and conclusive for the purpose of super-tax or surcharge, as the case may be, for the same year."
19. Rates of surcharge are dealt with under Part III of the First Schedule, which at the time, of inception of the Ordinance on 1-7-1979 was as follows:-
20. "In the case of every person deriving In addition to any sum pay income from the business of manufacture able under paragraph A or
21. , purchase or sale of paragraph B, a further sum
22. Jeweler, including gold, silver equal to 6% of such income. precious metals, stones and ornament or other articles made thereof:
23. Provided that the surcharge shall not be payable by any person (not being a company) whose total income does not exceed Rs. 12,000."
24. This provision was amended by Finance Ordinance, 1980, by raising the rate from 6% to 10%
25. Finance Ordinance, 1981, further changed the position as:-
26. In addition to any sum payable under para. B, a further sum computed as under:-
(a) Where such income does not exceed
27. Rs. 15,000.
28. 6 % of such income.
(b) Where such income exceeds Rs. 15,000 but does not exceed to Rs. 25,000.
29. Rs. 900 + 8 % of the amount exceeding Rs. 15,000.
(c) Where such income exceeds Rs. 25,000
30. Rs. 1,700 + 10% of the amount exceeding Rs. 25,000.
31. Provided that surcharge under this paragraph shall not be payable by any person, (not being a company) whose total income does Lot exceed Rs. 12,000.
32. Vide Finance Ordinance, 1983, para. C. was substituted as under :-
33. "In the case of every person deriving income from the business of manufacture, purchase or sale of Jewellery including gold, silver, precious metals, stones and ornaments or other articles made thereof, the surcharge shall be payable as under :-
(a) Where such income does not exceed
34. Rs. 21,000.
35. 6% of such income.
(b) Where such income exceeds Rs. 21,000 but does not exceed Rs. 31,000.
36. Rs. 1,260 + 8 % of the amount exceeding Rs. 21,000.
(c) Where such income exceeds Rs. 31,000.
37. Rs. 2,060 + 10% of the amount exceeding Rs. 31,000.
38. Provided that the surcharge shall not be payable by any person (not being a company) whose total income does not exceed Rs. 18,000.
3. The D., R. contended that under law surcharge is leviable on total income of an assessee as words used in Clause 'C' of Part III of Fin Schedule are 'income' or 'such income'. No where in this clause words 'taxable income' 'having been used, the D. R's case was that surcharge was a levy on total income. The D. R. emphasized that the words 'taxable income' were not specifically used in Clause 'C' as compared to other clauses of the First Schedule and it eras not a drafting error but was intentional construction of law.
39. The assessee's A. R. in his tuna contended that surcharge being tax like other tax i.e. income-tax and super-tax as is apparent from the definition of word 'tax', income basically exempt is to be deducted from the total income. The assessee's A. R. adopted the same argument as given in subsequent decision of the learned Single Bench. It was argued that to view of definition of 'taxable income' as per Part IV, para. B, sub-clause of the First Schedule of the Ordinance, surcharge is to be levied only able income as basic exemption of exempted income is allowable to every assessee notwithstanding anything contained in this Ordinance.
4. A bare perusal of the relevant provisions of section 40 (b) read with para. C of Part III of the First Schedule, leaves us in no doubt that jewelers surcharge is not to be levied if the income falls below the slab of exempted income, where, however, the income exceeds the allowed exemption, Jeweller's surcharge is it leviable on the whole of such income according to rates prevalent for the relevant year. Change in law is manifest and amount of exemption was restricted firstly to Rs.12,000 then to Rs.18,000 and where the assessed income exceeds exempted slab, whole amount whether of an individual or A. O. P. becomes liable to jeweller's surcharge, In this view of the matter, we overrule the decision of the learned Single Bench in I. T. A. Nos. 2730, 2731 and 2732 of 1981-82, dated 5-8-1983 holding that the words "such income" used in Part III of Schedule are relateable to word income as used in main para of clause 'C' which in other words means that whatever income is derived by the assessee has to be subjected to the levy of surcharge as word 'taxable income' has not been used in this para unlike other paragraphs. No doubt the proviso lays down that surcharge under para. C of Part III of First Schedule shall not be payable by any per (not being company) whose total income does not exceed Rs. 12,000 (or as the limit of exempted may be) but in cases where the total income does exceed the prescribed limit there being no provision that the surcharge has to be on taxable income alone, it is leviable on whatever income is derived by the assessee from the business of manufacture and sale of Jewellery. Section 10 subsection (2) of section 10 of the Ordinance surcharge is leviable on the total income of the-assessee as assessed for the purposes of income-tax. "Other provision" as mentioned in this section means provision of levy under part III of the First Schedule for the purpose of levy of surcharge on the Jeweller's.
40. In the result, for the aforesaid reason we hold that Jeweller's surcharge n leviable on the entire assessed income. Impugned orders are vacated an treatment meted out by the I. T. O. is restored. Both the departmental appeal succeed accordingly.
41. M. Z. M. Appeal accepted.