KHANDIGE SHAM BHAT AND OTHERS versus THE AGRICULTURAL INCOME TAX OFFICER

3 s.c.R. SUPREME COURT REPORTS

KHANDIGE SHAM BHAT AND OTHERS v.

THE AGRICULTURAL INCOME TAX OFFICER

(B. P. SINHA, 0. J., K. SuBBA RAo, J; C. SHAH, N. RAJAGOPALA AYYANGAR and J. R. MUDHOLKAR, JJ.)

Agricultural Income ta.t: -Temporary amendment of enactment consequent on reorganisation of States -Territorial classification in aefining previous year. If discriminatory-M oae of ascertaining rate -lf reasonable-Kerala Agricultu-ral Act, 1950 (Kerala 22 of 1950 ), as amenaed by Kerala Act 11 of 1959, s.2A -Constitution of Jnaia, Art 14.

This petition challenged the constitutional validity of s. 2A of the Kerala Agricultural Income Tax Act, 1950 as amended by Kerala Act 11 of 1959, under which the peti-tion er was assessed to agricultural income tax, on the ground tint the section infringed Art. 14 of the Constitution. Under the States Reoganisation Act, 1956, Kasargod Taluk where the petitioner had his agricultural land and which was in the State of Madras, became part of the Malabar District of the State of Kerala when that State came into being on November I, 1956. By the Travancore Cochin Agricultural Income Tax (Amendment) Act, 1957, the State Legisluture extended the earlier Act of 1950 to the erstwhile Madras areas. But the Kerala High Court held that agricu~tural income in such areas could not be assessed to tax for the assessment year 1957-1958 whereas similar income in other areas of the State remained liable to tax, the income accured between November I, 1.1956, and March 31, 1957, i.e. after the Madras areas became part of the Kerala State, could not also be taxed. In order to remedy this anomalous position brought about by the reorganisation of States the Kerala State Legislature inserted the impugned section in the ori-ginal Act, which provided as follows,-

"Notwithstanding anything contained in cl. (G) ~f Section 2, "previous years'' for the assessment for the finacial year commencing from the Ist day of April 1958 and so far as such assessment relates to the agricultural income derived from lands situated in the Malabar District referred to in sub-section (2) of section 5 of the States Reorganization Act, l ~56(Central Act 37 of 1957), shall be the whole p~riod I " : '1

.August 99.

810 SUPREME COORT REPORTS (1963]

commencing on the !st day of November, 1956 and ending on the 31st day of March, 1958, or, if the accounts of the assessee have been made up to date within the fincial year ending on the 31st day of March 1958, then at the option of the assessee, the period commencing on the !st day of Novem-ber, 1956, and ending on the aforeiaid date to which, the accounts have been so made up:

1962. Khatu#i1a Sham .Btir.d .. Aqricultu,.al lncomt·lax O Iicl1 •

provided that -

(i) notwithstanding anything continued in section 3 and 56, the agricultural income tax and super tax chargeable on the total agricultural income of the previous year as reckoned in this section shall be at the rates applicable to the 'average annual income-' according to the Schedule; such 'average annual income' shall be an amount bearing to the aforesaid total agricultural income the same proportion as the period of twelve months bears to the period of the previous year as defined in this section; and

(ii) the limit of exemption from chargeablity to tax shall be determined with reference to the average annual income."

It was urged on behalf of the petitioners that classifica-tion of the State into two parts i.e. Madras area aed Travan-core arf'a made by the impugned provision had no rational relation to the object of the Act and was discriminatory and that the basis adopted for ascertaining the rate of tax was arbitrary and unreasonable.

Htlrl, that the contentions must fail.

In order to judge whet her law was discriminatory what had primarily to be looked into was not its phraseology but its real effect. If there was equality and uniformity within each gronp, the law could not be discriminatory, though due to fortuitous circumstances in pecular situation some included in class might get some advantage over others, so long as they were not sought out for special treatment. Although taxation laws could be no ~xception to this 1ule, the courts would, in view of the inherent com-plexity of fiscal adjustment of diverse elements, permit larger discretion to the Legislature-in the matter of classifi-cation so Jong as there was no transgression of the fundamental principles underlying the doctrine of classification. The power of the Legislature to classify must necessarily be wide

3 S.C.R. SUPREME COURT REPORTS 811

and flexible so as to enable it to adjust its system of taxation in all proper and reasonable ways.

Shri Ram Krishna Dalmia v. Shri Juatic~ S. R. Tendcl-kar (1959] S.C.R. 287 Purshottam Govindji Halai v. Skree B.M Deaai, [1955] 2 S.C.R 887 and Kunnathat Thathunni. Moppil Nair v. State of Kerala, [1961]3 S.C.R. 77, referred to

The object of the classification made in the defination of 'previous year' by the impugned section was not to discri-minate against the agriculturists of the Madras area but to remove the difference that existed between them and those of the other areas of the State, due to historical reasons, by im· posing the tax on the assessees in the Madras area for the period November 1, 1956, to March 31, 1957. There could therefore, be no doubt as to the existence of reasonable nexus between the classification ard the object of the legisla-tion.

It wa~ not correct to say law based on geographical or territorial classification could be constitutionally valid only if it was pre-existing Act, and not if it was enacted after the merger. The law might be pre-existing law or one enacted after merger. The validity of classification did not wholly depend on the source of law but also on the circum-stances that prevailed in the two parts merged into one by historical events .

Shri Kishan Singh v. State of Rajasthan,[l955]2S CR 531 and Purahottam Govinclji Halai v. Shri B.M. Desai, [1955] S.C.R. 187. referred to.

Nor was it correct to say that the mode of the ascertain-ing the average annual income for fixing the rate was arbitrary and unreasonable. Although taxation law was as much subject to Art. 14 of the constitution as any other law, the court would not for obvious reason meticulously scrutinise the impact of its burd~ on different persons or classes and would not strike down the Jaw on the ground that not the one but another method of assessment sh0uld have been adopted unless it was convinced that the method adopted was capri: cious, fanciful, arbitrary or clearly unjust.

Although no Act, permanent or temporary, could violate Art. 14, the fact that the impugned legislation was to enure for year to tide over the situation, must have some bearing in judging the reasor.ablenees of the method Belected and it could not be struck down as unreasonable on the ground that there was better ahematives.

J'lll

U1a 11ig1 Sham.llli.t v. Atricullur•I fnco1n1-la:e Ojfi&l1

As it is eommon case that the decision in the first petition would govern the second one, it would suffice if the facts in the first petition were given.

Kasaragod Taluk, wherein the agricultural lands of the petitioner's family are situate, formed part of the district of South Kanara in the Madras State. Under the States Reorganization Act, 1956 (Central Act 37 of 1956) the Kerala State comprising the following territories was formed: (a) the territories of the existing State ofTravancore-Ooching excluding the te:ritories transferred to the State of Madras by Section 4; and (b) the territories 0omprised in (i) Mdabar District, excluding the islands of Laccadive an<l .. ,-' Minicoy, ' • and (ii) Kasaragod , Taluk I of Soutl;t . _i

3 S.C.R.

Kaaara District. Under the Act the territories comprised in Kasara,god Taluk of South Kanara District and the District of Malabar in the Madras State were constituted into separate district known as the Malabar District in the State of Kerala. For convenience of reference we shall here-inafter describe the territories carved out of the Madras State as Madras area and the rest as T-C area. After the formation of the State of Kerala on November 1, 1956, the laws in force in the State of M3.dras were continued in the Madras area and those in force in the Travancore·Cochin State were continued in the T.C. area. In the T.C. area agricultural income was liable to tax under the Travancore-Cochin Agricultural Income-tax Act (22 of 1950) which came into force on April 1, l!J51. After the formation of the Kerala State, the Legislature of that State enacted the Travaucore·Cochin Agricultural Income-tax (Amendment) Act, 1957. Whereunder the earlier Aot of 1950 was extended to the Madras area with appropriate amendments. Under the said Act agricultural income derived from lands situated throughout the State of Kerala became assessable with effect from assessment year 1957 58 . .Pursuant to the provisions of that Act the . Income-tax authorities started proceedings to assess the income derived from lands situated in the Madras area for the year 1957·58. Un petition filed by some of the assessees, the Kerala High Court held that the State of Kerala had no authority to fovy tax on agricultural income which accrued before November 1. 1956, from lands situated in the Madras area and that the assessments for 1957-58 were not sustain-able under the Act even in res:nect of inc0me which a.rose after Novemuer 1, 1956, on the ground th~t the previous year, as defined under the Act, wail period of twelve months ending on March 31, preceding the year for which assessment was to be

Khandige Sham Bha4 v. Agricultural lncome·lax Officer Subha llaoJ.

Kha.mlige Sham Bh•t •• Agricultural /11,ome•tax 0 .ffie1r Subba R•o J.

made. The result of the decision was that agricul-tural income derived from lands in the Madras area was not liable to tax for the assessment year 1957 . 58, whereas similar income from agricultural lands situated in the T.C. area was liable to tax, indeed, the income accrued between November I, 1956, and March 31, 1957, i. e., the income accrued after the Madras area became part of the Kerala State, also could not be taxed. To remedy the situation brought about by historical reasons in the two geographical parts of the Kera.la State, the Government of Kerala promulgated on January 12, 1959 the Agricultural Income-tax (Amendment) Ordinance II of 1959. Subsequently the Kerala Legislature passed the Agricultural Income.tax (Amendment) Aot II of 1959 replacing the earlier Ordinance, hereinafter called the Amending Act.Before the Amending Act was passed, the petitioner, who has lands in different villages in Kasaragod Taluk, submitted return of the income of his family for the assessment .vear 1957-58, and on June 30, 1958, the concerned IncomP-tax Officer determined the petitioner's net income for thfl accounting period April l, 1956, to March 31, 1957, and the tax payable thereon. The peti-tioner preferred an appeal to the Assistant Commissioner of Agricultural Income-t,ax, Kozhikode, against the order of the Income-tax Officer questioning the said assessment on the ground, inter alia, that the assessment was made arbitrarily. When that appeal was pending, the judgment of the Kerala High Court was delivered and subse-quently Ordinance II of 1959 was promulgated. The Assistant Commissioner, therefore, set aside the order of the Income-tax Officer on the basis of the decision of the Kerala High Court and remanded the matter to the Agricultural Income-tax Officer for disposal in accordance with law. After remand, on March 23, 1959, tho Income-tax

3 S.C.R.

Officer issued notice to the petitioner to submit his return of agricultural income for the assessment year 1957-58 in accordance with the provisions of the Ordinance and the subsequent Amending Act replacing the said Ordinance. On November 10, 1960, the Income-tax Officer determined the net income of the petitioner for the assessment year 1958-59 at Rs. 87,745.36 and assessed the tax at Rs. 21,920.41; the tax was calculated on the average net annual income of the petitioner for 12 months under the proviso to s. 2A of the Act. The petitioner seeks to set aside that assessment on the ground that the said section offends Art.14 of the Constitution and therefore the asses11ment was bad.

Mr. Pathak, learned counsel for the petitioner, argues that the classification of Kerala State into two parts, i.e,.~ the Madras area and the T-C area, has no rational relation to the object of the Act, na.nely, imposition of agricultural income-tax, for, as the two parts belong to the same State, no post·amalgamation law can treat asseRsees of the same State differently in the matter of taxation. He further contends that there is discrimination between assesee!'s of Kasaragod Taluk and those of the other part of the Madras area inasmuch as under s.2A of the Act the average annual income would be the average annual income of 12 monthEI out of 17 months, with the result that the assessees of Kasaragod Taluk whose entire income accrued after November I, 1956, were unjustly discriminated from assessees of the other part of the Madras area. whose income accrued only before November 1, 1956. He also contends that in any view the basis adopted for ascertaining the rate was arbitrary and unreasonable as 24 months' income was taken B'B income for I 7 months.

Khandige Sham Bhal · v. Agricultural Income-tax O jfw1r Subba Rao. J.

Ehandige Sham Bhat v. Ag,.i&ultural Income.tax 0 j['icer

Bubba Rao.

Learned Additional Solicitor General, on the other hand, Beeks to sustain the assessment on the ground that the classification was based on historical reasons, that on the face of the Act all the assessees falling within the class to which s.2A applies are treated alike, that the State is entitled to adopt one of the many modes av•ilable for ascertaining the rate, that whatever basis is adopted for ascertaining the rate there is bound to be some hard cases and that circumstance cannot conceivable affect the validity of the law.

At the'-outset it would be convenient to notice briefly the Jaw on the doctrine of classification. The law on the subject is well settled and it does not require restatement in extenso. It would suffice if we noticed the principles relevant to the enqnirv. The law has been neatly and succinctly summarized in Shri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar (')thus:

"It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i)' that the classification must be founded on an ' intelligible differentia which distinguished persons or things that are grouped together from others left out of the group and, (ii) that tha.t differentia must have rational· relation to the object sought to be achieved by the statute in question .. The classification may be founded on different ba~es, namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be nexus between the basis of classification and the object of the (!) (1959] S.C.R. 279, 796-297.

·.,._ j

3 S.C.R. SUPREME COURT REPORTS

.Act under consideration. It is also well established that article 14 condemns discri-mination not only by substantive law but also by law of procedure.''

Though law ex facie appears to treat all that fall within class alike, if in effect it operates unevenly on persons or property similarly situatod, it may be said that the law offends the equality clause. It will then be the duty of the court to scrutinize the effect of the law carefully to ascertain its real impact on the persons or property similarly situated. Conversely, law may treat persons who appear to be similarly situated differently; but on investigation they may be found not to be similarly situated. To state it differently, it is not the phraseology of statute that governs the situation but the effect of the law that is decisive. If there is equality and uniformity within each group, the law will not be condemned as discriminative, though due to some fortuitous circumstance arising out of peculiar situation some included in class get an advantage over others, so long as they are not singled out for special treatment. Taxation law is not an excep· tion to this doctrine : vide Purshottam Govindji Halai v. Shree B. N. Desai, .Additional Collector of Bombay (1) and K unnathat Thatunni M oopil Nair v. State of Kerala (2). But in the application of the principles, the courts, in view of the inherent com-plexity of fiscal adjustment of diverse elements, permit larger discretion to the I ... egislature in the matter of classification, so long it adheres to the fundamental principles underlying the said doctrine. The power of the Legislature to classify is of "wide range and flexibility" so that it can adjust its system of taxation in all proper and reasonable ways.

(1) [!955] 2 S.C.R. 887. (2) [1961]3 S.C.R. 77.

Jrhandige Sham Bhat Y. gricullural lncom•-•wt Officer Subba Rao J,

1961 JC handige Sham B/:al •• A.gricultu,al Income-tllX Ojfic1r • ~uliba Rao J.

818. SUPREME COURT REPORTS [1963)

Now Let us look at the impugned section. Section 2A of the Act reads :

''Notwithstanding anything contained in clause (Oj of section 2, "previous year" for the assessment for the financial year commencing from the 1st day of April 1958 and so far as such assessment relates to the agricultural income derived from lands situated in the Malabar Dietriot referred to in sub-section ( 2) of section 5 of the States ReorganiZlltion Act, 1956 (Central Act 37 of 1956), shall be the whole period commencing on the lst day of November, 1956 and ending on the 31st day of March, 19:58, or, if the accounts of the assessee have been made up to date within the financial year ending on the 31st day of March 1958, then, at the option of the assessee, the period commencing on the 1st day of November. 1956 and ending on the aforesaid date to which, the accounts have been so made up :

Provided that -

(i) notwithstanding anything contained in sections 3 and 56, the agricultural income-tax and super-tax chargeable on the total agricultural income of the previous year as reckoned in this section shall be at the rates applicable to the "average annual income" according to the Schedule ; such "average annual income" shall be an amount bearing to the aforesaid total agricultural income the same proportion as the period of twelve months bears to the period of the previous year as defined in this section ; and

··-f_ )

3 S.C.R. SUPREME COURT REPORTS

(ii) the limit of exemption from cha.rgeability to tax shall be determined with reference to the "average annual income''.

The Malabar Diatrict in the state of Kerala is constituted by combining Kasa.re.god Taluk of the South Kt\na.ra. District and the District of Malabar of the Madras State. For the purpose of assessment for the financial year 1958-59 in respect of agricul-tural income derived from the said district, s. 2A of the Act gives a. special definition of "previous year". Under that definition, "previous year" commences from November 1, 1966 and ends on March 31, 1958, i.e., period of 17 months; but the assessee can elect lesser period as ''previous year" if his accounts are made up to a. date within the financial year ending on March 31 1 1958, that is to say he can elect any date commencing from April 1, 1957, to March 31, 1958, if hie accounts are made up to that date in which case the "previous year" so for as he is concerned will commence from November 1, 1956, and end on the said date so chosen by him. The proviso to the section pres-cribes mode of ascertaining the rate of tax in regard to the said income : it lays down that in respect of the said income the rates are those applicable to the "average annual income'' accord· ing to the Schedule. The ''average annual income", as defined in the proviso, will be twelve-seven-teenths of the total income of the previous year as defined in the section, Under the section, therefore, the assessee in the Ma.dra s area will be liable to pay agricultural income-~ax on the income accrued to him during the 1 7 months commencing from November 1, 1956, and ending on March 31, 1958, but the rate of tax payable by him is that applicable to the "average annual income " so defined. The question is whether this section infringes Art. 14 of the constitution or whether it can be justified on the basis of the

Khandig1 Sham Bhat v. Agricultural Income-tax Ojficar

Subba Rao. J.

1962 lihandiie Sham Bhat .. Agricultural [-,icome·t1x Of}t'cer Subba Rao J.

doctrine of classification. In the narration of facts we have stated why it became necessary for the Lagislature to insert s.2A in Act 22 of 1950. By reason of the States Reorganization Act, the said Madras area became part of the Kera la State on November l, 1956. By reason of the decision of the Kerala High Court, agricultural income-tax could not be imposed in respect of income accrued to asaessees in the Madras area between April I, 1956, and March 31, 1957, and it was also not possible to tax them for their income even for that part of the year after it became part of the Kera.la State: with the result, the legislature was confronted with two geographical divisions in respect of one of which the said law of agricultural income·tax could not be enforced-while the assessees in the T-C area were liable tll agricultural income-tax in rBgard to their in-come from their lands for the yPar commencing from April I, b56, and ending on March 31, 1957, the iucome of the agriculturists in the Madras area could not be reached by that law in respect of the whole or part of that year. These differences between the two parts of the State which originated from histori-cal reasons were the basis of classification for the purpose of taxation. The object of making the classification was not to discriminate against the agriculturists of the Madras area but to brin~ them into line with the agriculturists f, om the rest of the Kera.la State in so far as the liability to pay agri-cultural income-tax was concerned. The existing law had therefore to be appropriately adapted for securing this end. In these circumstances, can it be said that there was no reasonable nexus between the classification and the object of the legislation? The object of the legislation thus was to impose agricultural income-tax on assessees in the Madras area and al8o in respect of the period between November I, 1956, and March 31, 1957, which could not be done under pre-existing law. The

3 S.C.R. SUPREME COURT REPORTS

differences between the two parts of the State have reasonable nexus to the said object. Because of the said differences the legislature thought that the definition of "previous year" should be so amended in respect of the Madras area that the assessees in that area. may not escape payment of agricultural income-tax in respect of the period after the said area formed part of the Kerala State., It is argued that this Court sustained the constitu-tional validity of law on geographical and territorial bases only in case where the said law was pre-existing law in an erstwhile State which. continued to be law in the area of that State after it merged in the larger unit, and that it cannot be invoked where the law is for the first time enacted after the merger, for, it is said, in th<tt event the law governs the new State as an indivisible unit. Reliance is placed upon the decision of this Court in Shri K ishan Singh v. The State of Rajasthan([1]) and Purshottam Govindji Halai v. Skree B.M. Deiai, Additional Collector of Bombay ([2]). But perusal of the Judgments docs not bear out the contention. The validity of classification does not wholly depend upon the source of law; the law may be pre-exis-ting law or one th!Lt was enacted after merger. What is important is to ascertain the existing circum-stances in the two parts merged into one by historical events in order to determine whether the differences between the two have reasonable nexus to the ob-ject of the said law. For the reasons already stated, we hold that the classification in the present case is founded on an intelligible differentia. between the assessees of the two parts of the State, and that the said differences ha.ve rational relationship to the object of the Amending Act.But it is said that the mode .of ascertaining the average annual income for the purpose of finding the co [I955J 2 s.c.R. 531. c2> [t95'5J 2 s.c.R. ss1.

Khandige Sham Bho.I v. Agricultural I nco:ne-tax 0 Jl.,cer Sub~a Rao J,

Khandig6 Sham Bhat

-Agricultural /ncome ... tax 0 jfic~r Subba Rao J.

rate is arbitrar~ and unreasonabre and that discri-mination is inherent in such law adopting such arbitrary process. This argument is elaborated thus : The major income of the petitioner's family is from arecanut, pepper and cocoanut; the said crops are gathered between the months of November and March; the season for harvesting arecanut in Kasaragod Taluk is from November to March; the 'whole year's pepper and cocoanut are gathered between the months of January and March; therefore, the income from arecanut, pepper and cocoanut accrued to the petitioner between November 1, 1956 ·and March 31, 1957, is the income for the entire year; but under the proviso to s. 2A of the Act, the said income is treated as the income for 5 months only, with the result that 24 months' income is treated as 17 months' income; this is an arbitrary assumption underlying the provision; instead it should have taken 12/24th of the total income as the average annual income. This arbitrary method of fixing the average annual income invol-ved the payment of higher rate of tax by the aseessees in Kasaragod Taluk as compared to the assessees in other parts of the State. It is suggested that more reasonable course would have been to tax the a[0]sessees in the Madras area for the income that accrued to them during the 5 months by treating the eaid income as the income for the entire year commencing from April 1, 1956, and ending on March 31, 1957, and that in that event not only their income for the said period could not have escaped taxation but it would have also avoided the unjust treatment meted out to them in the rate of tax. Prima'Jacie there appears to be some plausibility in this argument; but closer examination discloses that though the method sugges-ted may have been better than the method actually adopted, the hardship in individual oases cannot in any event b_e avoided. It is true taxation law cannot

3 S.C.R. SUPREME COURT REPORTS

claim immunity from the equality clause of 'the Constitution. The taxation 11tatute shall not also be arbitrary and oppressive, but at the same time the court cannot, for obvious reasons, meticulously scrutinize the impact. of its burden on different persons or interests. Where there is more than one method of assessing tax and the Legislature selects one out of them, the court will not be justified to strike down the law on the ground that the Legislature should have adopted another method which, in the opinion of the court, is more reason- · able, unless it is convinced that the method adopted is capricious, fanciful, arbitrary or clearly unjust. From the standpoint of the test, let us look at the impugned legislation. The taxability of the income accrued during the 5 months is not in question. But the attack is on the manner in which the rate is ascertained. The statute does not fix different rates for the two areas. The nte is the 1ame though it varies uniformly depending upon the different slabs of the annual income of tP,e previous year. The vice of the provision, if at all, lies in the mode of ascertaining the average annual income of the previous year and it is true that if the said mode is arbitrary, the same arbitrariness would attach to the rate. But the rate must neces11arily relate to the annual income of the previous year. Diverse methJds may be adopted by the Legislature to 11,scertain the annual income for fixing the rate, namely: (1) 12/17 of total income of the 17 months ; ( :l) the 5 months' income being treated as 12 months' income and the annual average income ascertained as 12/24th or half of the total income accrued during the 17 months ; (3) it may adopt the first 12 months' or the last 12 months' or the middle 12 months' income as the annual income; and (4) treating the 5 months' income as 12 months' income and separately taxing it without clubbing it with the incom~ of the subsequent year. Whatever

1962 /( handige Sham 8 ha I v. Agricultural Incom1·tax Officer Subba Rao J.

Kh-1ndige Sham Bhat v. Agricultural lncome·ta'C Ojfictr Subba RaoJ.

SUPREME OOURT REPORTS (1963)

method is adopted, there is bound to be hardship in some cases and advantage in others. For instance, under the Agricultural Income-tax Act assessees getting an income below Rs. 3,000/- are exempted from taxation. Under the impugned section the limit for exemption from taxation ;hall be deter-mined with reference to the average annual income. Suppose the annual income for the 12 months commencing from April 1, 1957, and ending on March 31, 1958, is above Rs. 3,000/-; the assessees in the T-0 area would be liable to pay income-tax, but particular assessee in the Madras area may have earned comparatively smaller income during the 5 months bringing down the average annual income below Rs. 3,000/- and he escapes asRessment altogether. Assume again that the assessee gets more than Rs, 3,000/- during the 5 months ; but he may have got very low income in the succeeding 12 months with the result that his annual average income may fall below the range of taxable income, while the assefisee in the T-C area, who has got; similar income for 1956·57, would be liable to tax. It is also true that if the assessee in the Madras ar11a gets very high inoome during th ise 5 months and little less than the taxable income during the succeeding 12 months, his income, which would have escaped taxation, would be liable to tax. These illustrations prove that the section does not always work to the disadvantage of assessees similarly situated like the petitioner. but its effect would depend upon fortuitous circumstances, such as the quantum of income accrued during the 5 months and during the succeeding 12 months. That apart under the section an option is given to the assessee to select his accounting year commencing from November 1, 1956, and ending on date within March 31, 1958, upto which his accounts have been made. If an agriculturist in the Male.bar ·area had made up his accounts on date which

3 S.C.R. _ SUPREME . COURT REPOR'rS

does not exceed a. period of 12 months from Novem-ber 1, 1956, he cannot have any complaint on the score that the rate fixed is arbitrary. But it is said that agriculturists in the Madras area do not keep accounts or at any rate would not have kept accounts before the Amending Act and therf'fore this argument is not realistic. But the record does not disclose that agriculturists of Malabar area dealing in cash crops, like arecanut, do not keep accounts or make up their accounts on particular date. Anyhow, the law gives an option to agricul· turists to adopt an alternative method in case the rate fixed on the basis of average annual income would be disadvantageous to them. The fact that they do not keep such an account could not be an argument to support the arbitrariness of the legisla-tion. But these advantages or disadvantages to individual assessees are accidental and inevitable artd are inherent in every taxing statute as it has to1 draw line somewhere and some cases necessa-ril\y fall on the other side of the line. That apart, the tabular statcmen t showing the area undHr the principal crops and their harvesting and markAting seasons in the Kerala State does not establish that in Kasaragod Taluk the entire crop of the year was halrveilted after November an i in the rest of Kera la before November. The following is the said state-ment:

K handige S fam hat v. Agricultural Income-tax 0 jfi&er Subba Rao J,

3 S.C.R .

Kf.andige Sliom Bhat v. Ag1Uultural lr1c0me· lax 0 jficer Subba Raa J.

It shows that in Cannanore, whioh includes Kasa-ragod Taluk, only areoanut, pepper, tea, coffee and rubber are harvested after November, but in the case of paddy. tapioca coconut and lemongrass the harvesting season is before November; cardamon is gathered partly before November and partly after November. The same is the position in regard to the entire State except in respect of arecanut; even in respect of arecanut, it is harvested in the Madras area other than Cannanore before November. The net result of this analysis is that in regard to large extent of land cultivated in· Kerala the harve-sting season is the same in respect of all the crops except arecanut and even in the case of arecanut out of 1,23,833 acres cultivated with that crop the harvesting s'ason in regard to 20, 771 acres alone commences after November. In such situation it cannot be said that the Legislature has arbitrarily, with an evil eye, selected the most advantageous period for the purpose of fixing the rate of taution. The said discussion leads to the only conclusion that the Legislature in its sincere attempt to meet d1ffic11lt situation made law adopting one of the diverse methods open to it and even the method adopted cannot be said to be either unreasonable or arbitrary, as the overall picture indicates that it works fairly well on all similarly situated, though some harrlship may he caused to some in the imple-mentation of the law which is almost inevitable in every taxa.tion law. We 0annot, therefore, say that in the present case the one method adopted instead of another is either arbitrary or capricious.

The next argument is that there is discrimina-

tion between assessees in Kasaragod area and those in the rest of the Madras area in that in the case of arecanut the assessees of Madras area, other than Kasaragod Taluk, would be in better position as they gather their crops before November. The

.. ' ....,

3 S.C.R.

&ssessees of the Madras area under the Act formed one class and s. 2A applies to all of them : s. 2A applies to both parts Of the Madras Area, i. e., the Malabar area and the South Kanara area. In both the cases the income of the assessees that accrued before November I, 1956 was not taxable; in both the cases the income that accrued thereafter is liable to tax. The rate also is the same. The statement only shows that all the crops, except arecanut, are gathered by the assessees of the entire area during the same period. The fact that in the case of one of the crops the assessees in the Malabar area . harvested earlier cannot be ground for holding that the law has made an unjust discrimination between persons beloning to the same class, but that is due only to the fortuitous circumstance of some assessees gathering the crops earlier than others. As we have pointed out, the arecanut crop is only one of the many crops in that area and the extent of its cultivation in Kasaragod Taluk is com· paratively lesser than that in the entire area of the State or even the Madras area. We cannot, ·therefore, say that the law made an unjust discri-mination between persons belonging to the same class.There is another aspect which may have bear-ing on the question raised. The impugned section is temporary provision intended to apply only for one year to tide over difficult situation brought about by the reorganization of States. It is true that every law, whether it is temporary or perma-nent, cannot infringe Art. 14 of the Constitution; but in considering the question of reasonableness of the legislation this circumstance will have some bearing, particularly when the Legislature Selected one of the many methods open to it. Though the method selected may not be as good as others, we cannot hold that it is unreasonable and, therefore, lia.ble to be struck down.

196[J Khandige Sham Bha I ,., Agricultural Income-tax 0 ff"' Subba Rao .1.

196B Khandig1 Sham Bhat •• Atricu1'ural Ineome.tax Officer Suhba Raa J.

--Augual 21.

In the result the petition is dismissed with costs.

It is common case that this decision will govern the other petition also, namely, Writ Peti-tion No. 104 of 1961. The said petition also is dismis-sed with costs. There will be one set of hearing fee. This order is without prejudice to the order for costs made on 16-3-1962.

Petitions dismissed.

BHIVA DOULU PATIL

STATE OF MAHARASHTJ:tA

(J. L. KAPUR, A. K. SARKAR apd M. HrDAYATULLAH, JJ.) '

Corroboration, if necessary 1872(1 of 1872),

Criminal 1'rial-Approver-qua each accused-Indian Evidence Act, 88. 114,133 .

.The appellant and R were convicted for murder on the testimony of an approver corroborated by the recovery at the instance of R of the knife with which the murder was commit-ted and of the evidence that the appellant and R had got the knife prepared nine weeks before the murder. The appellant contended that his conviction was illegal as there was no corrobo-ration of the testimony of the approver so far as he was concerned.

Held, that the conviction of the appellant was not sus. tainable. The law required that there should be corrobora-tion of the approver in material particulars and. qua each accused. The combined effect of ss. 133 and 114 illustration (b) is that though the conviction of an accused on the testi-mony of an accomplice could not be said to be illegal, the courts will not accept such evidence without corroborat:ion in