HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Mr. Justice Deoki Nandan Agarwala v. Union of India and Anr.
Civil Appeal No. 411 of 1982
[1999] 2 SCR 1074 ·
Constitution: Articles 125 and 221; Seventh Schedule List I entry 82 · Income-tax Act, 1961: section 14
Sources & disclosures includedDownload original judgment / order
5-judge Constitution Bench · S. P. Bharucha, J. · B. N. Kirpal, J. · S. Rajendra Babu, J. · S. S. Mohammed Quadri, J. · M. B. Shah, J.
Assessment years: 1978-79
01 · Facts of the case
An Allahabad High Court judge filed his return for AY 1978-79 claiming that judicial salary was not taxable. The Income-tax Officer and appellate authority rejected that contention. After leave was granted, four questions were referred to a Constitution Bench. At final hearing, argument focused on taxability before 1 April 1986 and whether the receipts could be taxed under the salaries head despite the absence of an employer.
Source: SCR pp. 1075-1076 / PDF pp. 2-3
02 · Discussion by the Hon’ble Court
The Court distinguished legislative control over judicial salaries from taxation of income. A restriction on Parliament altering salaries before the constitutional amendments did not exempt those salaries from income tax. Judges are constitutional functionaries without an employer, but Articles 125 and 221 expressly describe their receipts as salaries. Absence of an employer did not convert that constitutionally designated salary into a non-salary receipt for this purpose.
Source: SCR pp. 1076-1077 / PDF pp. 3-4
03 · Judicial decision
The appeal was dismissed. The Court upheld taxability of High Court and Supreme Court judges' salaries and their treatment under the salaries head. The purchasing-power question did not survive, and the dearness-allowance question was not answered; no separate costs direction appears in the operative text.
Source: SCR pp. 1076-1077 / PDF pp. 3-4
04 · Outcome / in whose favour
In favour of the Revenue on the taxability and classification issues actually decided. The judgment does not adjudicate the withdrawn purchasing-power claim or the unanswered dearness-allowance question.
Source: SCR pp. 1076-1077 / PDF pp. 3-4
05 · AKHB REVIEW POINT
AKHB analysis: identify the constitutional and statutory character of the particular payment before applying general employment tests. Keep the power to fix remuneration separate from the power to tax income. Do not infer an income-tax exemption from judicial independence or extend this classification automatically to every constitutional office or allowance.
Source: AKHB analysis based on SCR pp. 1076-1077 / PDF pp. 3-4
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