Deeming fiction in income tax upheld: remittances to a resident wife could be taxed as income without violating equality principles.

Section 4(2) of the Income-tax Act, 1922 deemed remittances received by a resident wife from a non-resident husband out of his income to be the wife's income, but the provision was within the taxing power because the subject of tax remained income and only the incidence was altered by legal fiction. The Article 14 challenge failed because the classification of such remittances had a rational relation to the object of taxing income, and the marital relationship provided a valid basis for special treatment. The objection based on denial of exemptions also failed, as the statutory fiction necessarily displaced inconsistent exemptions.

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Issues: Whether section 4(2) of the Income-tax Act, 1922 was beyond legislative competence and whether it offended Article 14 of the Constitution.

Analysis: Section 4(2) deemed remittances received by a resident wife from a non-resident husband out of his income to be income accruing to the wife. The provision was held to be within the taxing power under entry 54 of List I of the Seventh Schedule to the Government of India Act, 1935 because the subject of taxation remained income, not remittance; only the incidence of tax was shifted by legal fiction. The challenge under Article 14 also failed because the classification of remittances to a resident wife had a rational relation to the object of taxing income, and the marital relationship furnished a valid basis for special treatment. The further objection based on denial of exemptions and privileges was rejected on the footing that the legal fiction created by section 4(2) necessarily excluded inconsistent exemptions such as section 4(3)(vii).

Conclusion: Section 4(2) of the Income-tax Act, 1922 was valid and did not violate Articles 14 or 13 of the Constitution.

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