# STATE OF MADHYA PRADESH AND ORS v. SIRAJUDDIN KHAN

- **Citation:** [1964] 7 S.C.R. 838
- **Court:** Supreme Court of India
- **Decided:** 1964-04-22
- **Bench:** K. Subba Rao, J. C. Shah, S. M. S1Kri
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-madhya-pradesh-and-ors-v-sirajuddin-khan-3129
- **Pages:** 8

## Headnote

Madhya Pradesh Abolition of Proprietary Rights (Estates ..
Mahals, Ali&"tated Lands) Act, 1950 (M. P. Act No. 1 of 1951)
Sch. I, r. 2(2)(c).
The respondent was an owner of an estate in Madhya
Pradesh. Under the provisions of the Madhya Pradesh Aboli-·
tion 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 income would be calculated by deducting from the gross in-·
come, 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 r,espondent 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 supertax while calculating tire 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. 2(2) (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.
Held: (i) There are two essential differences between in--
come-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 mention-ed in
s. 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 payabl.e
by him direct as well as by deduction.
(ii) Examining the provisions of r. 2(2)(c) Schedule I of the
Act it is evident that with the knowledge that under the Income-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 talreS.
it would have stated income-tax and super-tax. The menticn·
or 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 ..
--
'1 S.C.R.
SUPREME COURT REPORTS
839
forests necessarily excludes super-tax for under the Income1964
tax Act no super-tax is payable in respect of the income re- State >I Ma4k
ceived from big forest but only in respect of the total income. p,.0.::Aana0t'f:..
(iii) Having regard to the terms of r. 2(2)(c) of Sche- 8 . ..,J· Kha•
dule I to the Act it is clear that income-tax does not take in ""'
in
.super-tax.
-
Case law reviewed.
Brooks v. Commissioner of Inland Revenue, (1914) 7 T.C.
236, Bates. In re: Salmea v. Bates, 1925 Ch. D. 157 and Reckitt
v. Reckitt, (1933) 1 LT.R. 1.

## Text

1964
April 22
838
SUPREME COURT REPORTS
[196t]
STATE OF MADHYA PRADESH AND ORS.
v.
SIRAJUDDIN KHAN
[K. SUBBA RAO, J. C. SHAH AND S. M. S1KRI, JJ.]
Madhya Pradesh Abolition of Proprietary Rights (Estates ..
Mahals, Ali&"tated Lands) Act, 1950 (M. P. Act No. 1 of 1951)
Sch. I, r. 2(2)(c).
The respondent was an owner of an estate in Madhya
Pradesh. Under the provisions of the Madhya Pradesh Aboli-·
tion 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 income would be calculated by deducting from the gross in-·
come, 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 r,espondent 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 supertax while calculating tire 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. 2(2) (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.
Held: (i) There are two essential differences between in--
come-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 mention-ed in
s. 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 payabl.e
by him direct as well as by deduction.
(ii) Examining the provisions of r. 2(2)(c) Schedule I of the
Act it is evident that with the knowledge that under the Income-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 talreS.
it would have stated income-tax and super-tax. The menticn·
or 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 ..
--
'1 S.C.R.
SUPREME COURT REPORTS
839
forests necessarily excludes super-tax for under the Income1964
tax Act no super-tax is payable in respect of the income re- State >I Ma4k
ceived from big forest but only in respect of the total income. p,.0.::Aana0t'f:..
(iii) Having regard to the terms of r. 2(2)(c) of Sche- 8 . ..,J· Kha•
dule I to the Act it is clear that income-tax does not take in ""'
in
.super-tax.
-
Case law reviewed.
Brooks v. Commissioner of Inland Revenue, (1914) 7 T.C.
236, Bates. In re: Salmea v. Bates, 1925 Ch. D. 157 and Reckitt
v. Reckitt, (1933) 1 LT.R. 1.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5101
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 J. 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
SueeA RAo, J.-This appeal by special leave raises the
Subba Baa, J.
question whether the expression "income-tax" in cl. (c) of
sub-r. (2) of r. ~ of Schedule I to the Madhya Pradesh Abolition of Proprietary Rights (Estate, Mahals, Alienated
Lands) Act, 1950 (M.P. Act No. 1 of 1951), hereinafter called 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 s. 8
.of the Act The compensation was to be determined in accordance 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 Compensation Officer determined the compensation payable to
the respondent at Rs. 2,21,330-12-6. In arriving at that figure
he deducted not only the income-tax payable by the respondent but also the super-tax and sur-charge payable by him.
1:he average of the income-tax paid by him during the material 30 years was only Rs. 3.760-2-9, but if the average of
'the super-tax and sur-charge was included, the average came
840
SUPRE:\IE COURT REPORTS
[1964]
1964
to Rs. 7,070-8-0. The result was that the net yearly income
State of Jfadhya of the estate was reduced by Rs. 3,JJ 0-5-3 and compensation
Prud"h aml. Other• was paid to him on the basis of the amount so reduced. The
Sirajud~",. 1'ha• respondent moved the Settlement Commissioner under s. 15
-
of the Act for enhancement of the compensation. but the
Subba Rao,
J. Commissioner confirmed the order of the Compensation
Officer. Thereafter, the respondent filed an application in
the High Court under Arts. 226 and 227 of the Constitution
for quashing the order of the Compensation Officer. ThC'
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. 2(2)(c) 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 a/ia, 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 exproprietary Act. the Court will have to construe such a pro--
vision strictly and if so construed, super-tax cannot be included 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. 2(2)(c) of the rules of Schedule I to the Act. The relevant
provisions of the Act and the rule read:
Section 8(1) 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
I."
Schedule I to the Act
Rule 2. (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
7 S.C.R.
SUPREME COURT REPORTS
841
the period of thirty agricultural years preceding
1!J64
the agricultural year in which the relevant date Statc of A!..U.ya
falls;
Pradesh ,,nd Othera
v •
•
•
•
•
•
8ir11juddin Khan
Rule 8. (!) The amount of compensation in the Cen·
Subba Rao, J.
tral 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 s. 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
-0f 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, "s. 3 charges the total income, s. 4 define its range, s. 6 qualifies it and ss. 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 pf tax. As regards super-tax,
a separate chapter viz., Ch. IX, deals with it; it comprises
ss. 55 to 58. Section 55 is the charging section for the purpose of super-tax; under that section. "In addition to the inwme-tax charged for any year, there shall be charged, levied·
and paid for that year in respect of the total income of the
842
SUPREME COURT REPORTS
[19641
1964
previous year ............... an additional duty of income-tax
Stale of MIU!.hya (in this Act referred to as super-tax) at the rate or rates laid
Pradesh and Other• down for that year by a Central Act". Section 56 says that
8 . . dJ: Kh
for the purpose of super-tax, except in specified cases, the
''"J" "'
an total income shall be the total income as assessed for the
S.Wba Rao, J.
purpose of income-tax. Section 56A exempts from super-tax
certain dividends. Section 58(1) 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 two taxes. But two relevant differences may be
noticed, namely, (i) 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
and chargeable under the different heads mentioned in s. 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 ollly 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 jncome
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. 25,000/-. If "A's"
total income is Rs. 35.000/- made up of Rs. 20.000/- from
big forest and Rs. 15,000 /- 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.
7 S.C.R.
SUPREME COURT REPORTS
843
With this background Jet us give a close look to the
J9G4
provisions of r. 2(2)(c) of Schedule I to the Act. The Jegls- StaJe of Mrulky•
Jative intention is manifest from the express language used Pradesh and Otli<n
and also by internal evidence. With the knowledge that Sirajwl;. Kha•
under the Income-tax Act two separate duties, namely, in-
-
come-tax and super-tax, are imposed, the Legislature has
Subba Rao, J,
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 necessarily 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 in- ·
appropriate 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 suj:ler-tax is ·
payable in respect of an income from a particular source.
The argument of Mr. Rajagopala Sastri, learned coun- ·
sel 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
SUPREi\IE COURT REPORTS
[1964J
964
The argument that if the Legislature intended not to
Sia!' nJ Madllya exclude super-tax from the gross-income, it would have exProd<.·1' ...i Oll1m pressly stated so in the rule is an attempt to put the shoe
S. . . 1-:: K'-
on the wrong foot. The proper approach, particularly in the
""J"' ""'
min
f
.
.
k h
.
h
case o an expropnetary statute, is to as
t e question w y
8.bba Bao, J.
the Legislature did not expressly mention super-tax, if it intended 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 v. The
Commissioner of Inland Revenue('):
" ............ for super-tax is another and a new tax
none the less, though it is an additional duty of
Income Tax."
In Bates, In re: Se/mes v. Bates('), 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 £ 2000." It was held that
the wife was entitled to the £ 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 inoome 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 £ 2500 clear of all deductions
for which the trustees were accountable, but that
did not include super-tax, which she must pay
herself ... ---
1') (1914) 7 T.C. 236. 258.
(') [1925] Ch. D. 157. 159-160, 161.
7S.C.R.
SUPREME COURT REPORTS
845
196i
The learned Judge proceeded to state:
"No super-tax is really payable
sum."
'in respect of this State ofMadhga
P-raduli and Ol4et'a
It is true that the said judgtpent 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 received 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. 2(2) of Schedule I to the Act excludes super-tax. In Reckitt,
In re: Reckitt v. Reckitt('), a fund was bequeathed to trustees upon trust for investment and to pay out of the income
of the investments "the annual sum of £ 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, M.R.,
distinguished the decision in Bates, In re: Se/mes v. Bates(')
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 Reckitf 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. 2(2)(c) 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 income-tax does not take in super-tax .
. h1 the result, the appeal fails and is dismised with costs.
A ppea/ dismissed.
(' )(1933) 1 I.T.R. 1.-
(') [1925] Ch. 0. 157.
v.
Sira.jud<li·n Kha"*
Sobba Rao, J.