Southern Roadways Private Ltd vs Union of India And Another

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Petition No. 143 of 1961

Decision Date: 16 January 1962

Coram: Kapoor, J.

The case titled Southern Roadways Private Ltd versus Union of India and another was decided on 16 January 1962. The judgment was delivered by a bench of the Supreme Court of India, which heard the petition filed by Southern Roadways Private Ltd. The petitioner was Southern Roadways Private Ltd and the respondents were the Union of India and another party. The date of the judgment was 16 January 1962 and the bench considered matters arising under the Income Tax Act. The specific statutory provision involved was the development rebate provision in section ten, subsection two, clause vi‑b, as amended by the Taxation Laws Amendment Act of 1960, second proviso. The headnote of the decision recorded that the assessee company owned a fleet of buses and was engaged in the business of transport. The income‑tax officer had disallowed the development rebate claimed on the transport vehicles owned by the company pursuant to the second proviso to section ten, clause vi‑b. The company challenged the validity of that proviso on the ground that it violated article fourteen of the Constitution. It argued that the provision discriminated between machinery that were office appliances or road‑transport vehicles and other kinds of machinery. The Court held that nothing in the Constitution prevents the Legislature from selecting the objects of taxation from among various classes of machinery for the purpose of granting a development rebate. The judgment began with a description of the original jurisdiction, noting that petition number 143 of 1961 was filed under article thirty‑two of the Constitution for enforcement of fundamental rights. Counsel for the petitioner were S Swaminathan and R Gopalakrishnan, while counsel for the respondents were K N Rajagopala Sastri and P D Menon. The judgment, delivered by Justice Kapur, stated that the petition was a challenge by the assessee under article thirty‑two of the Constitution to the constitutionality of the second proviso to section ten, clause vi‑b, which had been introduced by the Taxation Laws Amendment Act of 1960. The relevant statutory provision was reproduced in full, beginning with section ten, paragraph one, which imposed tax on profits and gains of business, profession or vocation. Paragraph two permitted certain allowances, including a development rebate of twenty‑five per cent of the actual cost of new machinery installed after 31 March 1954 and wholly used for the business. The allowance was subject to the condition that the assessee furnish prescribed particulars and that no allowance be made for machinery consisting of office appliances or road‑transport vehicles. The petitioner is a limited company with its registered office at Madurai in the State of Madras which owns a fleet.

The petitioner was a limited company that owned a fleet of buses and lorries and conducted business in the field of transport. For the assessment year 1960‑61 the company asserted a claim for a development rebate on every item of its plants and machinery, expressly including the transport vehicles that formed part of its fleet. The Income Tax Officer examined the claim and, relying on the proviso quoted in the relevant provision, refused to allow the rebate in respect of the transport vehicles. Consequently the officer calculated the tax liability without incorporating any rebate for those vehicles. The petitioner argued that the proviso was violative of Article 14 of the Constitution because it created a distinction between machinery that qualified as office appliances or road‑transport vehicles and other categories of machinery, thereby amounting to unlawful discrimination. The Court found such an argument untenable, observing that the Constitution contains no restriction that bars the legislature from selecting particular classes of machinery as the basis for granting a development rebate. The classification made by the statute was therefore not prohibited by constitutional law. On this basis the Court concluded that the petition lacked any merit, ordered its dismissal, and discharged the rule that had been filed. The Court further directed that the petitioner bear the costs incurred by the respondent, and entered a final order dismissing the petition.