ADMINISTRATIVE LAW

Question 1 :- Explain the growth of administrative law in India.?

Answer 1:-

The most notable and important development of the modern state is the rapid growth of
Administrative law. The growth which took place in the 20th century can be considered as a
radical change. The role and the functions of the state have undergone an extreme
alteration. There is a multiplication of government functions. The state which is functioning
today act as a progressive democratic state it as to make sure whether the essential needs of
the citizens are full filled by the state. It as to ensure Social peace and security, control the
over production, manufactures and distributes essential commodities, ensures equal pay for
equal work it should work on the improvement of slums, health and education of the
citizens the modern state takes care of its citizen till their existence inside the state. Such
kind of development have increased the reach and scope of Administrative law. It is the law
which governs the duties, powers and also the manner in which those powers are executed.
Administrative law limits the authorities from using their powers in an abusive manner.
Determining the Reasons for the Growth of Administrative law which helps in Analyzing
whether such growth has witnessed an efficient functioning of the Administrative
authorities. Administrative law developed principles which assist to ensure that the
Administrative or public authorities works in a legal, reasonable and efficient manner. This
article is mainly concentrated on knowing the reasons for the growth of Administrative law
with a brief introduction to the subject as well as the chronicle of administrative law and it’s
functioning, through which a better understanding of Administrative can be gained and also
the need for administrative law can be known.

Introduction:
In India there present several Administrative bodies appointed by the Central or the State
government to ensure a proper and systematic functioning of Government Agencies and
Public Enterprises established either by the state or the central governments. Administrative
agencies can be shortly classified into three the Legislative, the Executive and the Judiciary
All the administrative activities can be covered under these three main heads. It becomes
necessary to keep an eye on these Administrative Agencies. to regulate the activities of the
Administrative Authorities the concept of Administrative law was introduced.
Administrative law deals with the powers of the Administrative authorities, the manner in
which the powers are exercised and the remedies which are available to the aggrieved
persons when those powers are abused by these authorities. Administrative law is a part of
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constitutional law and all concerns of administrative law are also concerns of constitutional
law. The main object of the study of administration law is to unravel the way in which these
administrative authorities could be kept within their limits so that the discretionary powers
may not be turned into arbitrary powers.

Definitions of Administrative Law:

# Ivor Jennings has defines “ Administrative law is the law relating to the administration. It
determines the Organaisation, powers and duties of the administrative authorities”. This is
the most widely accepted definition.

# According to K.C.Davis administrative law is the law concerning the powers and
procedures of administrative agencies, including especially the law governing judicial
review of administrative action.

# According to Griffith and Street, the main object of administrative law is the operation
and control of administrative authorities.It must deal with three aspects.
1.What sought power does the administration exercise?
2.What are the limits of those powers?
3.What are the ways in which the administration is contained within those limits?

Chronicle of Administrative Law:

Administrative law is not a codified, document or well-defined law. It is essentially
unwritten, uncodified or a “judge-made” law. The evidence of administrative law can be
evidenced even in the ancient times. The concept of dharma ruled and observed by the
kings and administrators. The basic principles of natural justice and fair play were followed
by the kings and officers as the administration could be run only on those principles
accepted by dharma, but still there was no administrative law in existence in the sense in
which it is studied today. After the establishment of the East India Company and the rule of
British rule in India, the powers of the government had increased. Many Acts, statutes and
legislations were passed by the British government regulating public safety, health,
morality, transport and labour relations2. The practice of granting administrative license
began with the state with the Stage Carriage Act 1861.

The first public corporation was established under the Bombay Port Act, 1873. Delegated
legislation was accepted by the Northern India canal and Drainage Act,1873and the Opium
Act, 1878. Proper and effective steps were taken to regulate the trade and traffic in
explosives by the Indian Explosives Act, 1884.In many statutes, provisions were made
regarding holding of permits and licenses and for the settlement of disputes by the
administrative authorities and tribunals. In the present century, social and economic policies
of the government had significant impact on private rights of citizens, e.g. housing,
employment, planning, education, health, service, pension, manufacture of goods etc.,
Traditional legislative and judicial system could not effectively solve these problems.
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It resulted in increase in delegated legislation as well as tribunalisation. Administrative law
thus became a living subject. Since independence, the activities and the functions of the
government have further increased. Under the Industrial Disputes Act, 1947, the Minimum
wages Act, 1948, the factories Act, 1948 and the Employees State Insurance Act, 1948,
important social security measures have been taken those employed in industries. The
philosophy of a welfare state has been specifically embodied in the Indian constitution. In
constitution itself provisions are there to secure social, economic and political justice,
equality of status and opportunity to all citizens. The ownership and control of material
resources of the society should be so disturbed as to best serve the common good. The
operation of the economic system should not result in the concentration of wealth and
means of production with few. For the implementation of all objects, the state is vested with
the power to impose reasonable restrictions even on the fundamental rights guaranteed by
the constitution. While interpreting all these Acts and the provisions of the constitution, the
judiciary started taking into consideration the objects and ideals of social welfare.

In Joseph Kuruvilla Vellukunnel vs RB I4, the Supreme Court held that under the
banking companies Act, 1949, the Reserve Bank was the sole judge to decide whether the
affairs of a banking company were being conducted in a manner prejudicial to the
depositors interest and the court had no option but to pass an order of winding as prayed for
by the reserve bank.

Functions of Administrative Law:

The primary function of administrative law is to keep governmental powers within the
limits of law and to protect private rights and individual interests. As already noted, the
scope of activities of the government have expanded. Today the state is “ the protector,
provider, entrepreneur, regulator and arbiter”. Rulemaking power and an authority and an
authority to decide are described as effective and powerful weapons of administration. All
powers have two inherent characters

1) they are not absolute or unfettered, and

2) they are likely to be abused.

Administrative law attempts to control the powers of the government, and its agencies. To
achieve the object Administrative law provides an effective mechanism and adequate
protection. It helps to bring a balance between two conflicting forces individual rights and
public interest.

Reasons for the Growth of Administrative Law:

The following factors are responsible for the growth of administrative law:

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 1- There is a radical change in the philosophy of the role played by the state. The negative
policy of maintaining law and order and social welfare is changing. The state has not
confined its scope to the traditional and minimum functions of defense and administration
of justice, but has adopted the positive policy and as a welfare state has undertaken to
perform varied functions.

2- The judicial system was proved to be an inadequate to decide and settle all types of
disputes. It was slow, costly, inept, complex and formalistic. It was already overburdened
and it was not possible to expect speedy disposal of even very important matters. The
important problems could not be solved by mere literally interpreting the provisions of
some statutes, but required consideration of various other factors and it could not be done
by the ordinary courts of law. Therefore, industrial tribunals and labour courts. Were
established, which possessed the techniques and expertise to handle these complex
problems.

3- The legislative process was also inadequate. It had no time and technique to deal with all
the details. It was impossible for it to lay down detailed rules and procedures, and even
when detailed provisions were laid down by the legislature, they have found to be defective
and inadequate. Therefore, it was necessary to delegate some powers to the administrative
authorities

4- There is scope for experiments in administrative process. Here unlike, in legislation, it is

not necessary to continue a rule until commencement of the next session of the legislature.
Here a rule can be made , tired for some time and if it is defective, can be altered or
modified within a short period. Thus, legislation is rigid in character , while the
administrative process is flexible.

5- The administrative authorities can avoid technicalities. Administrative law represents

functional rather than a theoretical and legislative approach. The traditional judiciary is
conservative, rigid and technical. It is impossible for courts to decide cases without
formality and technicality. Administrative tribunals are not bound by rules of evidence and
procedure and they can take a practical view of the matter to decide complex problems.

6- Administrative authorities can take preventive measures. Unlike regular courts of law,
they do not have to wait for parties to come before them with disputes. In many cases, these
preventive actions may prove to be more effective and useful than punishing a person after
he has committed a breach of law. As freeman says, ‘ Inspection and grading of meat
answers the consumer’s need more adequately than does a right to sue the seller after the
consumer injured”.
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7- Administrative authorities can take effective steps for the enforcement of the aforesaid
preventive measures e.g. suspension, revocation and cancellation of license, destruction of
contaminated articles etc., which are not generally available through regular courts of law.

Conclusion:
The Role of administrative law is to limit the powers of the government agencies and keep a
check in on the administrative authorities. it is not always possible to rely upon some
general statutes for rising disputes between the individuals and the public authorities thus
there should be a proper law to govern such disputes, Administrative law act as the proper
law which governs the administrative actions.

Recommendations:
Administrative law is generally a unwritten and uncodified law. Administrative law is a
“judge-made law”. It is recommended to bring an codified form of administrative law
which ensures an complete growth of Administrative law and also makes the job of
administrative tribunals in deciding cases. An written form of administrative law gives an
well-versed recognisation of administration among the citizens of the country.

Question 2:- Write a brief note on Doctrine of Separation Of Powers.?

Answer 2:-

Introduction

“Power corrupts and absolute Power tends to corrupt absolutely.”

The separation of powers is based on the principle of trias politica. The Doctrine of
Separation of Power is the forerunner to all the constitutions of the world.

It is a wrong impression that the foundations of the British constitution lay in the principle
of Separation of Power, it found its genesis in the American Constitution.

A complete Separation of power without adequate checks and balances would have
nullified any constitution. It was only with this in mind the founding fathers of various
constitutions have accepted this theory with modifications to make it relevant to the
changing times.

After the end of the war of independence in America by 1787 the founding fathers of the
American constitution drafted the constitution of America and in that itself they inserted the
Doctrine of separation of power and by this America became the first nation to implement
the Doctrine of separation of power throughout the world.

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The Constituent Assembly Of France in 1789 was of the view that “there would be nothing
like a Constitution in the country where the doctrine of separation of power is not
accepted”. In France, where the doctrine was preached with great force by Montesquieu, it
was held by the more moderate parties in the French Revolution.

However, the Jacobins, Napoleon I and Napoleon III discarded the above theory for they
believed in the concentration of power. But it again found its place in the French
Constitution of 1871.
Montesquieu’s Theory

According to this theory, powers are of three kinds: Legislative, executive and judicial and
that each of these powers should be vested in a separate and distinct organ, for if all these
powers, or any two of them, are united in the same organ or individual, there can be no
liberty. If, for instance, legislative and executive powers unite, there is apprehension that
the organ concerned may enact tyrannical laws and execute them in a tyrannical manner.
Again, there can be no liberty if the judicial power is not separated from the legislative and
the executive. Where it joined the legislative, the life and liberty of the subject would be
exposed to arbitrary control, for the judge would then be the legislator. Where it joined with
the executive power, the judge might behave with violence and oppression.

The Doctrine of “Separation of Powers”, a vintage product of scientific political philosophy

is closely connected with the concept of “judicial activism”. “Separation of Powers” is
embedded in the Indian Constitutional set up as one of its basic features. In India, the
fountain-head of power is the Constitution. The sovereign power has been distributed
among the three-wings:

 Legislature
 Executive
 Judiciary

The doctrine of separation of powers envisages a tripartite system. Powers are delegated by
the Constitution to the three organs and delineating the jurisdiction of each.
Principle of Checks and Balances

The doctrine of separations of powers may be traced back to an earlier theory known as the
theory of mixed government from which it has been evolved.

The Roman constitutions counteracted that instability and tendency to degeneration by a

happy mixture of principles drawn from all the three primary forms of government. The
consuls, the Senate and the popular Assemblies exemplified the monarchical, the
aristocratic and the democratic principles respectively.

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The powers of Government were distributed between them in such a way that each checked
and was checked by the others so that an equipoise or equilibrium was achieved which
imparted a remarkable stability to the constitutional structure.
Importance

The doctrine of separation of power in its true sense is very rigid and this is one of the
reasons why it is not accepted by a large number of countries in the world. The main object
as per Montesquieu in the Doctrine of separation of power is that there should be
government of law rather than having will and whims of the official. Also, another most
important feature of the above-said doctrine is that there should be the independence of
judiciary i.e. it should be free from the other organs of the state and if it is so then justice
would be delivered properly.

The judiciary is the scale through which one can measure the actual development of the
state if the judiciary is not independent then it is the first step towards a tyrannical form of
government i.e. power is concentrated in a single hand and if it is so then there is a cent
percent chance of misuse of power. Hence the Doctrine of separation of power does play a
vital role in the creation of a fair government and also fair and proper justice is dispensed
by the judiciary as there is the independence of the judiciary.
Indian Outlook

In India, the doctrine of separation of powers has not been accorded constitutional status.
Apart from the directive principle laid down in Article 50 which enjoins separation of
judiciary from the executive, the constitutional scheme does not embody any formalistic
and dogmatic division of powers.

The Supreme Court in Ram Jawaya Kapur v. State of Punjab, held:

“Indian Constitution has not indeed recognized the doctrine of separation of powers in its
absolute rigidity but the functions of the different parts or branches of the government have
been sufficiently differentiated and consequently it can be very well said that our
Constitution does not contemplate assumption by one organ or part of the State of functions
that essentially belong to another.”

In Indira Nehru Gandhi v. Raj Narain, Ray C.J.also observed that in the Indian
Constitution there is separation of powers in a broad sense only. A rigid separation of
powers as under the American Constitution or under the Australian Constitution does not
apply to India. However, the Court held that though the constituent power is independent of
the doctrine of separation of powers to implant the story of basic structure as developed in
the case of Kesavananda Bharati v. State of Kerela on the ordinary legislative powers will
be an encroachment on the theory of separation of powers. Nevertheless, Beg, J. added that
separation of powers is a part of the basic structure of the Constitution. None of the three
separate organs of the Republic can take over the functions assigned to the other. This
scheme of the Constitution cannot be changed even by resorting to Article 368 of the
Constitution.
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In India, not only is there a functional overlapping but there is personnel overlapping also.
The Supreme Court has the power to declare void the laws passed by the legislature and the
actions taken by the executive if the violate any provision of the Constitution or the law
passed by the legislature in case of executive actions. Even the power to amend the
Constitution by Parliament is subject to the scrutiny of the Court. The Court can declare any
amendment void if it changes the basic structure of the Constitution. The President of India
in whom the Executive Authority of India is vested exercises lawmaking power in the shape
of ordinance making power and also the judicial powers under Article 103(1) and Article
217(3) to mention only a few. The Council of Ministers is selected from the Legislature and
is responsible to the Legislature. The Legislature besides exercising law-making powers
exercises judicial powers in cases of breach of its privilege, impeachment of the President
and the removal of the judges. The Executive may further affect the functioning of the
judiciary by making appointments to the office of the Chief Justice and other Judges.
Judicial Opinion on the Doctrine of Separation of Powers

The first major judgment by the judiciary in relation to Doctrine of separation of power was
in Ram Jawaya v State of Punjab. The court in the above case was of the opinion that the
Doctrine of separation of power was not fully accepted in India. Further, the view of
Mukherjea J adds weight to the argument that the above-said doctrine is not fully accepted
in India. He states that:

“The Indian constitution has not indeed recognized the doctrine of separation of powering
its absolute rigidity but the functions of the different parts or branches of the government
have been sufficiently differentiated and consequently it can very well be said that our
constitution does not contemplate assumption, by one organ or part of the state, of functions
that essentially belong to another”.

the most landmark judgments delivered by the Supreme Court in Keshvananda Bharti v
Union of India the court was of the view that amending power was now subject to the basic
features of the constitution. And hence, any amendment tampering these essential features
will be struck down as unconstitutional. Beg, J. added that separation of powers is a part of
the basic structure of the constitution. None of the three separate organs of the republic can
take over the functions assigned to the other 7. Hence this further confirmed the opinion of
the court in relation to the doctrine of separation of power.

Then in Indira Gandhi Nehru v. Raj Narain, where the dispute regarding P.M. election
was pending before the Supreme Court, opined that adjudication of a specific dispute is a
judicial function which parliament, even under constitutional amending power, cannot
exercise i.e. the parliament does not have the jurisdiction to perform a function which the
other organ is responsible for otherwise there will be chaos as there will be overlapping of
the jurisdictions of the three organs of the state.

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Question 3 :- What is delegated legislation.? What are the constitutional limitations on
the delegation of legislative power in India.?

Answer :-

The concept of “Delegated Legislation” has gained prominence in the recent times and
several factors have been responsible for the spurt seen in delegated legislation in Modern
India. A modern society is faced many a time with situations when sudden need is felt for
legislative action. There may be threats of aggression, breakdown of law and order, strikes
etc. Such situations cannot be met adequately unless the executive has standby powers. The
Legislature cannot be meet at short notice and turn out legislation on the spur of the
moment. It is therefore a desirable expedient to pre-arm the Government with necessary
powers so as to enable it to take action at a moment’s notice by promulgating the needed
rules and regulations according to the needs of the situation.

Salmond defines “delegated legislation” as “that which proceeds from any authority
other than the sovereign power and is therefore dependent for its continued existence
and validity on some superior or supreme authority”.

Reasons for Delegation

The Supreme Court in the case of Agricultural Marketing Committee v. Shalimar

Chemical Works Ltd., enunciated the following reasons for the growth of delegated
legislation:

1. The area for which powers are given to make delegated legislation may be
technically complex, so much so that it may not be possible and may even be
difficult to set out all the permutations in the Statute;
2. The Executive may require to experiment and to find out how the original
legislation was operating and therefore to fill up all other details;
3. It gives an advantage to the Executive, in the sense that a Government with an
onerous Legislative time schedule may feel tempted, to pass skeleton legislation
with the details being provided by the making of rules and regulations.

What are the limits of Delegated Legislation?

The delegation of legislative power is permissible only when the legislative policy is
adequately laid down and the delegate is empowered to carry out the policy within the

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guidelines laid down by the legislature. The Judiciary has settled and reiterated in several
cases that

The Judiciary has settled and reiterated in several cases that a delegate must exercise
jurisdiction within the four corners if its delegation and any action beyond the permissible
limits has no legal validity unless ratified by the delegator. The power of sub-delegatee
cannot exercise power which is not expressly by statutory provisions. The sub-delegatee
must conform not only to the provisions of the regulations and the Act under which the
power has been conferred but also under other relevant Parliamentary Act.

In the case of J.K. Industries Limited v. Union of India, the Supreme Court explained the
limits on delegated legislation by stating that though the Legislature has wide powers of
delegation, it cannot delegate uncontrolled power and the same is confined by legislative
policies and guidelines.

In case of Raj Narain Singh v. Chairman Patna Administration committee Air 1954 SC
569in which S.3(1)(f) wherein the Bihar & Orissa Act, empowered the local administration
to extend to Patna the provisions of any sections of the act ( Bengal Municipality Act, 1884)
subject to such modification, as it might think fit. The government picked up section 104
and after modifications applied it to the town of Patna. One of the essential features of the
Act was the provision that no municipality competent to tax could be thrust upon a locality
without giving its inhabitants a chance of being heard and of being given as opportunity to
object. The sections which provided for an opportunity to object were excluded from the
notification. It was held as amounting to tamper with the policy of the Act.

Effectiveness of Parliamentary Control over Delegated Legislation

In India the legislative control over administration in parliamentary countries like India is
more theoretical than practical. In reality, the control is not that effective as it ought to be.
The following factors are responsible for the ineffectiveness of parliamentary control over
delegated legislation in India:
(i) The Parliament has neither time nor expertise to control the administration which has
grown in volume as well as complexity.
(ii) The legislative leadership lies with the executive and it plays a significant role in
formulating policies.
(iii) The very size of the Parliament is too large and unmanageable to be effective.
(iv) The majority support enjoyed by the executive in the Parliament reduces the possibility
of effective criticism.
(v) The growth of delegated legislation reduced the role of Parliament in making detailed
laws and increased the powers of bureaucracy.
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(vi) Parliament’s control is sporadic, general and mostly political in nature.
(vii) Lack of strong and steady opposition in the Parliament has also contributed to the
ineffectiveness of legislative control over administration in India.
(viii) There is no automatic machinery for the effective scrutiny on behalf of the Parliament
as a whole; and the quantity and complexity are such that it is no longer possible to rely on
such scrutiny.

Conclusion
If in India parliamentary control over delegated legislation is to be made a living continuity,
it is necessary that the role of the committees of the Parliament must be strengthened and a
separate law like the Statutory Instruments Act, providing for uniform rules of laying and
publication, must be passed. The committee may be supplemented by a specialised official
body to make the vigilance of delegated legislation more effective. Besides this other
measures should be taken to strengthen the control of Parliament over delegated legislation.

The Parliamentary control over delegated legislation in USA and India is not as effective as
in UK. In UK the laying off procedure is followed effectively because there all
administrative rule-making is subjected to the control of Parliament through the Select
Committee on Statutory instruments. In India the control is not very much effective. There
are no statutory provisions regarding ‘laying’ of delegated legislation. Though the working
of the Scrutiny committees is not very effective, yet they have proved to be an effective
body in examining and improving upon the legislative control over delegated legislation.

SHORT NOTES

Question 1:- Droit Administratiff.?

Answer 1:-

Administrative law is the body of law that governs the activities of administrative
agencies of government. Government agency action can include rule making, adjudication,
or the enforcement of a specific regulatory agenda. Administrative law is considered a
branch of public law.

Administrative law deals with the decision-making of such administrative units of

government as tribunals, boards or commissions that are part of a national regulatory

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scheme in such areas as police law, international trade, manufacturing,
the environment, taxation, broadcasting, immigration and transport.

Administrative law expanded greatly during the twentieth century, as legislative bodies
worldwide created more government agencies to regulate the social, economic and political
spheres of human interaction.

Civil law countries often have specialized administrative courts that review these decisions.

In France, most claims against the national or local governments as well as claims against
private bodies providing public services are handled by administrative courts, which use
the Conseil d'État (Council of State) as a court of last resort for both ordinary and special
courts. The main administrative courts are the tribunaux administratifs and appeal courts are
the cours administratives d'appel. Special administrative courts include the National Court
of Asylum Right as well as military, medical and judicial disciplinary bodies. The French
body of administrative law is called "droit administratif".

Over the course of their history, France's administrative courts have developed an extensive
and coherent case law (jurisprudence constante) and legal doctrine (principes généraux du
droit and principes fondamentaux reconnus par les lois de la République), often before
similar concepts were enshrined in constitutional and legal texts. These principes include:

1. Right to fair trial (droit à la défense), including for internal disciplinary bodies
2. Right to challenge any administrative decision before an administrative court (droit
au recours)
3. Equal treatment of public service users (égalité devant le service public)
4. Equal access to government employment (égalité d'accès à la fonction publique)
without regard for political opinions
5. Freedom of association (liberté d'association)
6. Right to Entrepreneurship (Liberté du Commerce et de l'industrie, lit. freedom of
commerce and industry)
7. Right to Legal certainty (Droit à la sécurité juridique)

French administrative law, which is the founder of Continental administrative law, has a
strong influence on administrative laws in several other countries such as Belgium, Greece,
Turkey and Tunisia.

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Question 2:- Rule of Law.?
Answer 2:-

INTRODUCTION TO RULE OF LAW

The concept of Rule of Law is that the state is governed, not by the ruler or the nominated
representatives of the people but by the law. A county that enshrines the rule of law would
be one wherein the Ground norm of the country, or the basic and core law from which all
other law derives its authority is the supreme authority of the state. The monarch or the
representatives of the republic are governed by the laws derived out of the Ground norm
and their powers are limited by the law. The King is not the law but the law is king.
Supremacy of Law:

This has always been the basic understanding of the rule of law that propounds that the law
rules over all people including the persons administering the law. The lawmakers need to
give reasons that can be justified under the law while exercising their powers to make and
administer the law.
Equality before the Law:

While the principle of supremacy of law sets in place cheques and balances over the
government on making and administering the law, the principle of equality before the law
seeks to ensure that the law is administered and enforced in a just manner. It is not enough
to have a fair law but the law must be applied in a just manner as well. The law cannot
discriminate between people in matters of sex, religion, race etc. This concept of the rule of
law has been codified in the Indian Constitution under Article 14 and the Universal
Declaration of Human Rights under the Preamble and Article 7.
THEORETICAL APPLICATION OF RULE OF LAW IN INDIA

Indian adopted the Common law system of justice delivery which owes its origins to British
jurisprudence, the basis of which is the Rule of Law. Dicey famously maintained that the
Englishman does not need Administrative law or any form of written law to keep checks on
the government but that the Rule of Law and natural law would be enough to ensure the
absence of executive arbitrariness. While India also accepts and follows the concept of
natural law, there are formal and written laws to ensure compliance.

The Constitution of India intended for India to be a country governed by the rule of law. It
provides that the constitution shall be the supreme power in the land and the legislative and
the executive derive their authority from the constitution. Any law that is made by the
legislature has to be in conformity with the Constitute failing which it will be declared
invalid, this is provided for under Article 13 (1). Article 21 provides a further check against
arbitrary executive action by stating that no person shall be deprived of his life or liberty
except in accordance with the procedure established by law.

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Article 14 ensures that all citizens are equal and that no person shall be discriminated on the
basis of sex, religion, race or place of birth, finally, it ensures that there is a separation of
power between the three wings of the government and the executive and the legislature
have no influence on the judiciary. By these methods, the constitution fulfills all the
requirements of Dicey’s theory to be recognized as a country following the Rule of Law.

The Supreme Court of Indian has further strengthened this mechanism through its various
judgments, the foremost of them being, A D M Jabalpur v. Shivkanth Shukla In this case,
the question before the court was ‘whether there was any rule of law in India apart from
Article 21’. This was in the context of suspension of enforcement of Articles 14, 21 and
22 during the proclamation of an emergency. The answer to the majority of the bench was
in negative for the question of law. However, Justice H.R. Khanna dissented from the
majority opinion and observed that:

“Even in absence of Article 21 in the Constitution, the state has got no power to deprive a
person of his life and liberty without the authority of law. Without such sanctity of life and
liberty, the distinction between a lawless society and one governed by laws would cease to
have any meaning…Rule of Law is now the accepted norm of all civilized societies”

Most famously in the case of Kesavananda Bharati v. State of Kerala the Supreme Court
held that the Rule of Law is an essential part of the basic structure of the constitution and as
such cannot be amended by any Act of Parliament, thereby showing how the law is superior
to all other authority of men.
PRACTICAL APPLICATION OF RULE OF LAW IN INDIA

In addition to the problem faced in India due to corruption in the lawmaking and justice
delivery systems, there also exists the problem of old laws still being in place. India does
not adopt a ‘sunset’ clause in its laws and post-independence the Indian Independence Act
provided that all laws existing under the colonial rulers would continue to exist under the
new system unless explicitly revoked by the parliament.

While this did provide the nation with a firm basic system of laws, thereby preventing a
situation of anarchy in the immediate aftermath of independence, some of these laws were
drafted to suit the environment of those time and they become hard to interpret in the
current environment. This leads to ambiguity and endless litigation in an attempt to interpret
the provisions.
Most famously in the case of Maneka Gandhi v. Union of India the court ensured that
exercise of power in an arbitrary manner by the government would not infringe the rights of
the people and in Kesavananda Bharati the court ensured that laws could not be made that
essentially go against the Rule of Law by saying that the basic structure could not be
breached.

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CONCLUSION

The founding fathers of India accomplished what the rest of the world though impossible-
establish a country that would follow the letter of the law and implement the Rule of Law.
In all matters such as the protection of the rights of the people, equal treatment before the
law, protection against excessive arbitrariness, the Constitution of India has provided
enough mechanisms to ensure that the Rule of Law is followed.

Through its decisions, the Courts have strived to reinforce these mechanisms and ensure
smooth justice delivery to all citizens. Problems such as outdated legislation and
overcrowded courts are but small hindrances and bodies such as the Law Commission of
India work towards ironing out these problems with the aim of achieving a system where
there are no barriers to the smooth operation of the Rule of Law.

Question 3:- Sub Delegation.?

Answer 3:-

Delegation is the process of giving permission by the head of a department to the

subordinates to do work or to make decisions. Although the subordinates are authorized to
do the work, the responsibility still remains with the head or the superior. Delegation is
important as without it, it would be very difficult for a director/head to complete all of
his/her tasks.
Similarly administrative agencies can also delegate their functions or powers both under
federal and state laws. Delegation of powers by an administrative agency to its
subordinates is sub-delegation because powers of administrative agencies are already
delegated to it by other branches of government. An administrative agency cannot delegate
those powers which are characterized as legislative or judicial and they should be
performed solely by the agency/individual who is identified in the legislation. If the
legislation provides wide discretionary power to the administrative agency then that agency
can use that discretion for delegation when specific circumstances arise.
Administrative functions can be delegated by the agency without any hindrance. But only
those persons on whom powers are directly vested can exercise the function of delegation.
An agency has the power to delegate those powers which are expressly mentioned in the
statute or which can be implied from the nature of that particular agency or department.
Further, the person or agency responsible for delegation must take sufficient safeguards
against capricious exercise of power by the subordinates. The delegation of powers and
functions to subordinates is deemed to be unconstitutional if the delegation is not within the
range of authority of the delegating agency.
1. Delegation is the act of making or commissioning a delegate. It generally means
parting of powers by the person who grants the delegation and conferring of an
authority to do things which otherwise that person would have to do himself.
15
 Delegation is defined in Black’s Law Dictionary as “the act of entrusting another
with authority by empowering another to act as an agent or representative”.
2. There is a subtle distinction between delegation of legislative powers and delegation
of non-legislative/administrative powers. As far as delegation of power to legislate is
concerned, the law is well-settled: the said power cannot be sub-delegated. The
Legislature cannot delegate essential legislative functions which consist in the
determination or choosing of the legislative policy and formally enacting that policy
into a binding rule of conduct.
3. Regarding delegation of nonlegislative/administrative powers on a person or a body
to do certain things, whether the delegate himself is to perform such functions or
whether after taking decision as per the terms of the delegation, the said agency can
authorize the implementation of the same on somebody else, is the question to be
considered. Once the power is conferred, after exercising the said power, how to
implement the decision taken in the process, is a matter of procedure.
4. The issue was considered by this Court in Jamal Uddin Ahmad v. Abu Saleh
Najmuddin and Another in the context of the procedure for filing of the election
petitions under Section 81 of the Representation of Peoples Act, 1951. It was held
that the ministerial or administrative functions of the authority on whom the powers
are conferred by the statute can be exercised by the authorized officers.
5. Practical necessities or exigencies of administration require that the decision making
authority who has been conferred with statutory power, be able to delegate tasks
when the situation so requires. Thus, the maxim delegatus non potest delegare, gives
way in the performance of administrative or ministerial tasks by subordinate
authorities in furtherance of the exercise of the delegated power by an authority.
6. The Constitution confers power and imposes duty on the Legislature to make laws
and the said functions cannot be delegated by the Legislature to the executive. The
Legislature is constitutionally required to keep in its own hands the essential
legislative functions which consist of the determination of legislative policy and its
formulation as a binding rule of conduct. After the performance of the essential
legislative function by the Legislature and laying the guiding policy, the Legislature
may delegate to the executive or administrative authority, any ancillary or
subordinate powers that are necessary for giving effect to the policy and purposes of
the enactment.

16
 CRPC
Question 1:- Explain the procedure relating to conduct of trial before the court of
session under the criminal procedure code.?

Answer 1:-

Depending upon the gravity of offences and their punishment, the Code of Criminal
Procedure, 1973 divides criminal trials into Magisterial trial and Sessions trial. The first
schedule to the Cr.P.C. specifies the offences punishable under Indian Penal Code, 1860,
triable either in Magistrates’ Courts or in Court of Session. The second part of the first
schedule deals with the offence and their punishment in other laws.

Sessions Trial or Trial before a Court of Session

Section 225-237 of the Code deals with the procedure for a trial before a Court of Session.
A session trial is coupled with arguments, evidence and cross-examinations. A sessions’
trial can be conducted in the following stage:

Initial Stage
A trial is initiated by the prosecution who tries to prove the guilt of the accused through
evidence. Section 225 of the Code lays down that the case of prosecution shall be conducted
by a Public Prosecutor where the trial is before a Court of Session. A Public Prosecutor is a
person appointed under section 24 of the Code and includes any person who is acting under
the directions of such prosecutor. As per section 226 of the Code requires a public
prosecutor to open his case by describing the charges against the accused and must also
state the evidence through which the prosecution will prove the guilt of the accused.

An accused may be discharged at the initial stage of a sessions’ trial. Section 227 empowers
the Judge to discharge an accused if after consideration of the documents and records
submitted against the accused and after hearing the prosecution and accused, the judge finds
that there is no sufficient ground to proceed against the accused. The section aims to ensure
that a person is not harassed unnecessarily by the means an unnecessary prolonged criminal
trial. In Sushil Ansal v. State, it was held that an order of discharge may be passed only
where the Court is almost certain that there is no prospect of conviction and that the time of
the Court need not be wasted by holding a trial. The Court while discharging an accused is
required to record the reasons for such discharge. The Court in the case of Century Spinning
& Manufacturing Co., explained the importance of the bare words ‘there is no sufficient

17
ground for proceeding’ used in section 227. These words mean that no reasonable person
could come to the conclusion that there is ground whatsoever to sustain the charge against
the accused.

Difference between discharge and acquittal

A discharge under section 227 is different from the acquittal. The cases State of
Maharashtra v. B.K. Subba Rao and Tulsa Bai v. State of Madhya Pradesh, explains the
difference between the two. In the former case, it was held that after the stage of framing a
charge there can be only one of the two conclusions to the trial, either the accused is
convicted or acquitted. If after framing of charge, no evidence is led on the basis of which
the Court could convict the accused, then only an order of acquittal can be passed, and not
of discharge. The latter case explained, before framing a charge, the Court needs not
undertake an elaborate enquiry. It needs only to consider whether no sufficient ground
exists for proceedings against the accused. If it is so found, the accused will be discharged
otherwise charge shall be framed and the accused be put to trial.

The initial stage of the trial ends with the framing of charge against the accused. the Court
after considering all the records and the documents and the hearing of the prosecution and
accused believes that there exists sufficient ground that the accused has committed an
offence, shall frame the charge against the accused in writing. In Perm Kumar v. the State
of Karnataka, it was held that before framing a charge, the Court should properly evaluate
the material and documents placed before it and apply its mind to find out whether any fact
in the FIR or statements of witnesses disclosed the ingredients of the alleged offence. As
per section 228 (2) of Cr.P.C., every charge framed shall be read and explained to accused.
In Suresh Kumar v. State of Uttar Pradesh, it was held that an accused is entitled to a copy
of the statement of the complainant before framing the charge.

Second Stage
Under section 229 of Cr.P.C. an accused may plead guilty before the Court and upon such
pleading, the Court on his discretion may convict the accused. The accused should plead
guilty by his own mouth and not through his pleader or counsel.Any admission made by his
pleader is not binding on him. The plea of guilty only amounts to an admission that the
accused committed the acts alleged against him. It is not an admission of guilt under any
particular section of the criminal statute.

Where the accused refuses or does not plead guilty, the Court is required to fix a date for
the examination of witnesses. And on such date, the Court shall take the evidence which
may be produced by the prosecution. A witness will be examined orally. A judge under
18
section 231 (2) may defer the cross-examination of any witness and may also recall any
witness for further cross-examination.

Third Stage
It is the last stage of the trial where the accused is either convicted or acquitted. Under
section 232 of the Code, an accused can be acquitted if the Court after hearing both the
parties and considering all the evidence, considers that there no evidence which proves the
commission of the alleged offence by the accused.If the accused is not acquitted then the
Judge calls upon him to enter on his defence. This provision is mandatory. An omission on
the part of the Judge to do so occasions failure of justice. The accused in his defence may
apply for issue of any process to compel the attendance of any witness or production any
documents. A Judge is required to consider all such application but can also refuse it if the
Judge has reasons to believe that such application is vexatious or is made for the purpose of
defeating the ends of justice.

A Court after hearing the arguments shall pronounce the judgment under section 235 of the
Code. An accused may be either acquitted or convicted. The acquittal will be done as per
the procedure embodied under section 232 but the judgment for conviction will be
pronounced in accordance with section 235. A judge shall pass the sentence of conviction
according to law.

Question 2:- What is bail.? Explain the circumstances under which bail may be
granted by the court in non-bailable offence.?

Answer 2:-

Bail denotes the provisional release of an accused in a criminal matter in which the court is
yet to announce a judgment. The expression 'bail' means a security deposited to appear
before the court for release. Originally, the word is derived from an old French verb ‘bailer’
which means ‘to give’ or ‘to deliver’. A ball is granted to an accused after presenting a bail
bond to the court.

The primary objective of arrest is to ensure that the accused in a criminal case appears
before the court for the conveyance of justice. However, if the person’s presence can be
guaranteed for the court trial without putting the person in a jail, it would unfair and unjust
to violate a person’s liberty. Thus, bail can be granted as a conditional liberty to the
accused.

Types Of Bail In India

There are commonly 3 types of bail in India which a person can apply depending upon the
stage of the criminal matter:
19
 1. Regular Bail: A regular bail can be granted to a person who has already been
arrested and kept in police custody. A person can file a bail application for regular
bail under Section 437 and 439 of the CrPC.
2. Interim Bail: Interim bail is a bail granted for a short period of time. Interim bail is
granted to an accused before the hearing for the grant of regular bail or anticipatory
bail.
3. Anticipatory Bail: A person who discerns that he may be arrested by the police for a
non-bailable offence, can file an application for anticipatory bail. It is like an advance
bail obtained under Section 438 of the CrPC. A bail under Section 438 is a bail
before arrest and a person cannot be arrested by the police if the anticipatory bail has
been granted by the court.

Section 473 of CrPC

governs the law relating to grant of bail for non-bailable offences.

At the very outset, it is clarified that yes a bail can be granted even in cases of Non-
Bailable offences under the Code of Criminal Procedure (CrPC). The difference
being that bail is a matter of right if the offence is bailable and is a matter of
discretion if the offence is non-bailable. In the case of Talab Haji Hussain v.
Madhukar Purshottam Mondkar[1], the Supreme Court held that grant of bail in non-
bailable cases is generally a matter in the discretion of the authorities in question.

The essence of bail was succinctly explained by the Supreme Court in the case
of State Of Rajasthan, Jaipur vs Balchand @ Baliay[2], wherein the Court
remarked that the basic rule is bail, not jail, except-where there are circumstances
suggestive of fleeing from justice or thwarting the course of justice or creating other
troubles in the shape of repeating offences or intimidating witnesses and the like by
the petitioner who seeks enlargement on bail from the court. When considering the
question of bail, the gravity of the offence involved and the heinousness of the crime
which are likely to induce the petitioner to avoid the course of justice must weigh
with the court.

Essential elements of Section 473 of CrPC

The statutory provision under Section 473 of CrPC confers a discretionary power on the
Court or concerned Police Officer the power to release the accused on bail, accused of non-
bailable offence. Exception being that the accused shall not be guilty of offence punishable

20
with death or with imprisonment for life. However, the following categories of persons may
be released on bail even if charged for a non-bailable offence:

1. Person under the age of 16 years

2. A woman
3. A sick or infirm person

Where a person is charged with a non-bailable offence, but it appears in the course of the
trial that he is not guilty of such offence, he can be immediately released on bail pending
further inquiry.

Section 473 of CrPC also provides for review of the order by the Court which has released
the person on bail. The power of the Magistrate under this section cannot be treated at par
with the powers of the Sessions Court and the High Court under Section 439 of
CrPC (Special powers of High Court or Court of Session regarding bail).

Bail matters to be decided judiciously

In plethora of judgments the judiciary has indicated that bail matters shall be decided
judiciously. In a recent case Dataram Singh v. State of Uttar Pradesh & Anr., the Supreme
Court emphasized on deciding bail matters judiciously and in human manner. The Apex
Court observed that fundamental postulate of criminal jurisprudence is the presumption of
innocence, meaning thereby that a person is believed to be innocent until found guilty. It
was also observed that the grant or refusal of bail is entirely within the discretion of the
judge hearing the matter and though that discretion is unfettered, it must be exercised
judiciously and in a humane manner and compassionately.

Question 3:- Explain investigation, inquiry, trial & inquest.?

Answer 3:-

1. Introduction
The definition of the word “investigation” is not exhaustive. An investigation by the police
commences with the first step taken by the police-officer in the matter of the offence and
the culprit thereof. The word ‘inquiry’ means to include everything done in a case by a
Magistrate whether the case has been challenged or not. It does not always mean a judicial
inquiry. The word “inquiry must be distinguished” from “investigation” under Chapter XIV
21
on the one hand and a “trail” on the other. A “trail” is a judicial proceeding which ends in
conviction or acquittal. All other proceedings are inquiries which have various endings
according to circumstances.

2. Relevant Provisions
Section 4(1)(k) Cr.P.C 1898 for Inquiry
Section 4(1)(I), 1898 for investigation

A. Inquiry
i. Literal Meaning of Inquiry
a. Research
b. Interrogation
c. Investigation

ii. Meaning of Inquiry

a. Any proceedings conducted by Magistrate
b. Any proceedings conducted by a Court

iii. Definition u/s 4(1)(k) Cr.P.C

“Inquiry includes every inquiry other than a trial conducted under this code by a
magistrate or Court”.

(iv) Object of Inquiry

Determination of truth

(v) Kinds of Inquiry

a. Departmental Inquiry
b. Judicial Inquiry

(vi) Inquiry vs Trial

Inquiry is the proceeding which may be prior to trial.

(vii) Authority to conduct Inquiry

Magistrate or Court

22
B. Investigation
i. Literal Meaning of Investigation
a. Study
b. Search
c. Inquiry

ii. Meaning of Investigation

a. Proceeding conducted by Police Officer
b. Proceeding for the collection of evidence

iii. Definition of Inquiry

“Investigation includes all the proceedings under this code for the collection of
evidence”.

iv. Nature of Investigation

Criminal in nature

v. Object of Investigation
To collect evidence relating to commission of an offence.

vi. Authority to Investigate

The Police officer or any person authorized by a Magistrate not a Magistrate.

vii. Step of Investigation

a. Commission of offence
b. Cognizable offence
c. Registration of FIR
d. Visit of place of occurrence by Police Officer incharge
e. Ascertainment of facts by Police Officer incharge
f. Calculation with reference to circumstances
g. Recovery of any material
i. Arrest of suspected persons
j. Arrest of nominated accused persons
k. Collection of evidence
I. Examination of various persons
m. Reduction of their statement into written form
n. Search or censor of place of occurrence
o. Formation of opinion
p. writing of daily diary (Zimni)
q. Preparation of final report

23
C.Trial
i. Literal meaning of Trial
a. Attempt
b. Examination by a test
c. Judicial examination or investigation

ii. Meaning of Trial

The judicial proceedings conducted by Court.

iii. Commencement of Trial

Trial starts after submission of challan till announcement of judgment.

iv. End of Trial

a. In acquittal or
b. Conviction

v. Procedure for Trial under Cr.P.C

a. Trial by Magistrate
b. Summary Trial
c. Trial by High Court & Court of Session

6. Distinction between Inquiry, Investigation and Trial

Following are the distinction between inquiry, investigation and Trial

i. Conducting Authority
a. Inquiry. Magistrate or the Court
b. Investigation. Police officer or any person authorized by a Magistrate.
c. Trial. Judge or a Magistrate

iii. Commencement
a. Inquiry. It starts when complaint is filed to the Magistrate
b. Investigation. It starts when FIR is lodged or complaint is made to the
Magistrate.
c. Trial. It starts either by framing of charge or arrangement of the accused.

iv. As to meaning
a. Inquiry. Any proceedings conducted by Magistrate or a Court.
b. Investigation. Proceedings conducted by Police Officer.
c. Trial. The Judicial Proceedings conducted by Court.
24
v. Result
a. Inquiry. It finishes only with the recommendations.
b. Investigation. It finishes with the result but with opinion of the police
officer to be submitted before the Court.
c. Trial. It finishes with the punishment or acquittal.

vi. Purpose
a. Inquiry. Determination of truth.
b. Collection of evidence for reading near the truth.
c. Trial. Finalization of truth and falsity.

vii. Proceedings
a. Inquiry. It is proceedings by Magistrate.
b. Investigation. It is proceeding by Police Officer
c. Trial. It is judicial proceedings.

viii. Framing of Charge

a. Inquiry. In a charge is framed during inquiry.
b. Investigation. In it, no charge is framed.
c. Trial. It starts after farming of charge.

ix. Remedy.
a. Inquiry. Appeal or revision against decision.
b. Investigation. Second inquiry order
c. Trial. Transfer of investigation order

x. Process
a. Inquiry. It is the last process
b. Investigation. It may be 1st and 2nd process.
c. Trial. 1st process

D. Inquest
Section 174 of the Code of Criminal Procedure is a legal provision that deals with the
procedure that the police and the magistrate need to follow in cases of suicide and unnatural
death.
When a person does not die due to the natural circumstances, a person is considered victim
of unnatural death. Some of the causes of unnatural deaths are accidental death, murders,
animal attack, complications of surgery, suicide and many more.
25
If a person dies naturally, then there lies no suspicion so as to the death of the person. But in
case of unnatural death, the death is caused due to circumstances which needs to be
explained and examined. There lies a obligation on the state to secure the health and life of
every citizen of the country. If any crime is committed, the crime is against the state. If a
person dies due to unnatural circumstances, the state is burdened to identify the cause of
death and if there lies a suspicion as to the cause of death, the state must take appropriate
steps to punish the guilty. In order to provide for the procedure in case a person dies
unnaturally, Section 174 was created that lays down the procedure the police officer and the
magistrate must follow i case of untimely deaths.
Inquest Report under Section 174 CrPC
For the purpose of the unnatural deaths, the executive magistrate upon the intimation by the
Station House Officer or some other Police Officer specially empowered by the State
Government, shall prepare an inquest report which shall contain the minute details
regarding the cause of death of a person. Inquest report is prepared by District Magistrate,
Additional District Magistrate, Sub-divisional Magistrate, or Mandal Executive Magistrate
especially empowered in this behalf by the State Government[1] when the deaths are
sudden and unexplained.
The deaths that the Section 174 talks about are:
Suicide,
Murder,
Animal attack,
Death by machinery,
Or death under circumstances raising reasonable suspicion that some other person has
committed an offense.
For preparing the report, the magistrate shall be investigating the cause of death. In the
report, the magistrate must describe the apparent cause of death where he shall describe the
smallest of details that he comes across upon investigation of the dead body. Some of the
details that the magistrate must describe are:
Nature of surrounding where the dead body is found.
Any wounds, fractures, bruises, and other marks that may be found on the body. The
magistrate must state the manner in which any wound or injury or any other mark happened
to be on the body, whether the mark is by birth, or otherwise that caused the death of the
person.
The marks if caused by any weapon or an instrument.
In the case of Kuldeep Singh v State of Punjab[2], the Supreme Court has held that the
contents of the inquest report cannot be treated as an evidence, but they can be looked into
to test the veracity of a witness.

26
Conclusion
Under the code investigation consists generally of the following steps;
1. Proceedings to the spot,
2. Ascertainment of the facts and circumstances of the case.
3. Discovery and arrest of the suspected offender
4. Collection of evidence relating to the commission of the offence which may consist of
a. the examination of various persons (including the accused) and the reduction of their
statement into writing, if the officer thinks fit,
b. the search of places or seizure of things considered necessary for the investigation and to
be produced at the trial.

SHORT NOTES
Question :- First Information Report.?

Answer :-

What is First Information Report (FIR)

The first information report means an information recorded by a police officer on duty
given either by the aggrieved person or any other person to the commission of an alleged
offence. On the basis of first information report, the police commences its investigation.
Section 154 of the Code of Criminal Procedure, 1973 defines as to what amounts to first
information.

The said section reads as under:-

154. Information in cognizable cases

(1) Every information relating to the commission of a cognizable offence, if given orally to
an officer-in-charge of a police station, shall be reduced to writing by him or under his
direction, and be read over to the informant; and every such information, whether given in
writing or reduced to writing as aforesaid shall be signed by the person giving it, and the
substance thereof shall be entered in a book to be kept by such officer in such form as the
State Government may prescribe in this behalf.

27
(2) A copy of the information as recorded under sub-section
(1) shall be given forthwith, free of cost, to the informant.

(3) Any person aggrieved by a refusal on the part of an officer-

in-charge of police station to record the information referred to in sub-section (1) may send
the substance of such information, in writing and by post to the Superintendent of Police
concerned, who if satisfied that such information discloses the commission of a cognizable
offence shall either investigate the case himself or direct an investigation to be made by any
police officer subordinate to him, in the manner provided by this Code, and such officer
shall have all the powers of an officer-in-charge of the police station in relation to that
offence.

The provision in section 154 regarding the reduction of oral statement to writing and
obtaining signature of the informant to it, is for the purpose of discouraging irresponsible
statement about criminal offences by fixing the informant with the responsibility for the
statement he makes.

Refusal by the informant to sign the first information is an offence punishable under section
180 of the Indian Penal Code. The absence of signatures on the first information report by
the informant, however, is not necessary to the extent that it will vitiate and nullify such
report. The first information is still admissible in evidence.

In order to constitute an FIR in terms of section 154 of the Code. of Criminal Procedure,
1973 two conditions are to be fulfiUed:-
(a) what is conveyed must be an information; and
(b) that information should relate to the commission of a cognizable offence on the face of
it.

In other words, FIR is only a complaint to set the affairs of law and order in motion and it is
only at the investigation stage that all the details can be gathered. In one of the judgments,
the Madhya Pradesh High Court observed that the report of the crime which is persuading
the police machinery towards starting investigation is FIR, subsequent reports are/were
written, they are not hit under section 161 of the Code of Criminal Procedure, 1973 and
cannot be treated as such.

Who can File an FIR?

First Information Report (FIR) can be filed by any person. He need not necessarily be the
victim or the injured or an eye-witness. First Information Report may be merely hearsay
and need not necessarily be given by the person who has first hand knowledge of the facts.

28
Where to File an FIR?

An FIR can be filed in the police station of the concerned area in whose jurisdiction the
offence has occurred. A first are to obtain information about the alleged criminal activity so
as to be able to take suitable steps for tracing and bringing to book the guilty person.

Its secondary though equally important object is to obtain early information of an alleged
criminal activity and to record the circumstances before the trial, lest such circumstances
are forgotten or embellished.

Why FIR should be filed promptly

This is the golden principle of law prescribed in the Code of Criminal Procedure, 1973 that
the First Information Report should always be filed promptly and without wasting any time.
Such type of report gains the maximum credibility and is always welcome and appreciated
by the courts.

According to Supreme Court the FIR recorded promptly before the time afforded to
embellish or do away with the evidence is useful. It eliminates the possible chance of giving
rise to suspicion.

Is there time duration fixed for Filing an FIR?

We have already emphasized this fact that as far as possible and practicable, every FIR
should invariably be filed promptly, expeditiously and without wasting any time. There may
be circumstances where some concession of time must be given in filing the FIR But there
must be cogent reasons for reasonable delay in filing the FIR under the compelling
circumstances. Judges with lot of wisdom and experience can use their discretion
judiciously and in the interest of justice in each and every case. However, no possible
duration of time can be fixed for applying the test of reasonableness to the lodging of an
FIR as we have already explained. It depends upon facts and circumstances of each case.
The delay in lodging the FIR as such is not fatal in law if the prosecution substantiated the
factual difficulties encountered by the persons lodging the report.

Following are the reports or statements which do not amount to be an FIR:-

1. A report or a statement recorded after the commencement of the investigation (sections

162 and 163 of the Code of Criminal Procedure, 1973).
2. Reports not recorded immediately but after questioning of witnesses.
3. Reports recorded after several days of developments.
4. Information not about occurrence of cognizable offence but only cryptic message in the
29
form of an appeal for immediate help.
5. Complaint to the Magistrate.
6. Information to beat house.
7. Information to the Magistrate or police officer on phone.
8. Information received at police station prior to the lodging of an F.LR.

It was held in Damodar v. State of Rajasthan, AIR 2003 SC 4414: 2003 AIR SCW 5050:
2003 (4) RCR (Cri) 355 (SC) that if the information was conveyed to police on telephone
and DO entry was made, it will not constitute an FIR even if the information disclosed
commission of cognizable offence.

Question 2:- Juvenile Welfare Board.?

Answer 2:-

JUVENILES: WHO ARE THEY?

A “Juvenile” or “Child” means a person who has not completed eighteen years of age.

According to International Law, a ‘Child’ means every human being below the age of 18
years. Today this is a universally accepted definition of a child which comes from the
United Nations Convention on the Rights of the Child (UNCRC).

Under the Indian Laws,

Section 2 (k) of the Juvenile Justice (Care and Protection of Children) Act,2000 defines
“juvenile” or “Child” as a person who has not completed eighteenth year of age.

Definitions of Juvenile/Child under various national legislations:

 Child Labor (Prohibition and Regulation) Act, 1986.

Section 2 (ii), “Child” means a person who has not completed the age of 14 years.

 Child Marriage Restraint Act, 1929.

Section 2 (a), “Child” means a person who, if a male, has not completed twenty one years
of age, and if a female, has not completed eighteen years of age.

 Immoral Traffic (Prevention) Act, 1956.

Section 2 (a), “Child” means a person who has not completed the age of sixteen years.

About juvenile justice board and it’s functioning:

30
  Sec 4(1): A Juvenile Justice Board (or more than one) has to be established in every
district in the country in 1 year (i.e. by 2007)
 Sec 4(2): At least, 1 woman should be there among the 3 members of the board
 Sec 4(3): The Judicial Magistrate (JM) or the Metropolitan Magistrate (MM) should
have special knowledge or have received training on child psychology / child welfare
& the two social workers on the board should have at least 7 years of active
experience working towards issues of children.
 Sec 4(5)(iii): Members shall be disqualified if they do not attend continuously for 3
months or if overall attendance in a year is less than 75%.
 Sec 5(1) & Rule 9(3): juvenile justice board should meet on every working day of a
week unless cases are less and such a specific order exists to that effect.
 Rule 9(5): every juvenile justice board session should be at least for 5 hours
 Sec 5(2): In case the board is not sitting, a juvenile allegedly in conflict with law can
be produced in front of any single member of the board.
 Sec 5(3): Final disposal of a case in the juvenile justice board requires at least the JM
/ MM and one social worker to be present
 Sec 6(1): Juvenile justice board is the single exclusive authority for cases of juvenile
in conflict with law
 Sec 6(2): A Session’s court or a High court can take appeals or revisions against a
juvenile justice board order and exercise the powers conferred on the juvenile justice
board by this Act.
 Sec 7: In case, any case relating to a juvenile allegedly in conflict with law comes up
in a court, the court shall redirect the same to the juvenile justice board.

Juvenile Welfare Boards. –

(1) The State Government may, by notification in the Official Gazette, constitute for any
area specified in the notification, one or more Juvenile Welfare Boards for exercising the
powers and discharging the duties conferred or imposed on such Board in relation to
neglected juveniles under this Act.

(2) A Board shall consist of a Chairman and such other members as the State Government
thinks fit to appoint, of whom not less than one shall be a woman; and every such member
shall be vested with the powers of a Magistrate under the Code of Criminal Procedure, 1973
(2 of 1974).

(3) The Board shall function as a Bench of Magistrates and shall have the powers conferred
by the Code of Criminal Procedure, 1973 (2 of 1974), on a Metropolitan Magistrate or, as
the case may be, a Judicial Magistrate of the first class.

31
Question 3:- Executive Magistrate.?
Answer 3:-
There are four categories of magistrates in the Judiciary of India. This classification is given in the
Criminal Procedure Code, 1973 (CrPC). It stipulates that in each sessions district, there shall be:

a Chief Judicial Magistrate,

a Sub-Divisional Judicial Magistrate,
a Judicial Magistrates First Class, and
an Executive Magistrates [including DM, ADMs, SDMs]

An Executive Magistrate is an officer of the Executive branch (as opposed to the Judicial branch)
who is invested with specific powers under both the CrPC and the Indian Penal Code (IPC). These
powers are conferred by Sections 107-110, 133, 144, 145, and 147 of the CrPC. These officers
cannot try any accused nor pass verdicts. A person arrested on the orders of a court located outside
the local jurisdiction should be produced before an Executive Magistrate who can also set the bail
amount for the arrested individual to avoid police custody, depending on the terms of the warrant.
The Executive Magistrate also can pass orders restraining persons from committing a particular act
or preventing persons from entering an area (Section 144 CrPC). There is no specific provision to
order a "curfew". The Executive Magistrates alone are authorised to use force against people. In
plain language, they alone can disperse an "unlawful assembly". Technically, the police are to
assist the Executive Magistrate. Executive Magistrates can dictate to the police the manner of force
(baton charge/ tear gas/blank fire/firing) and also, how much force should be used. They can also
seek the assistance of the Armed Forces to quell a riot.

Sec 20 of Criminal Procedure Code, 1973 (CrPC) - 20.Executive Magistrates.-

(1) In every district and in every metropolitan area, the State Government may appoint as many persons as
it thinks fit to be Executive Magistrates and shall appoint one of them to be the District Magistrate.

(2) The State Government may appoint any Executive Magistrate to be an Additional district Magistrate,
and such Magistrate shall have all or any of the powers of a District Magistrate under this Code or under
any other law for the time being in force.

(3) Whenever, in consequence of the office of a District Magistrate becoming vacant, any officer succeeds
temporarily to the executive administration of the district, such officer shall, pending the orders of the State
Government, exercise all the powers and perform all the duties respectively conferred and imposed by this
Code on the District Magistrate.

(4) The State Government may place an Executive Magistrate in charge of a sub-division and may relieve
him of the charge as occasion requires; and the Magistrate so placed in charge of a sub-division shall be
called the Sub-divisional Magistrate.

(5) Nothing in this section shall preclude the State Government from conferring, under any law for the time
being in force, on a Commissioner of Police, all or any of the powers of an Executive Magistrate in relation
to a metropolitan area.

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 JURISPRUDENCE

Question 1:- "Reason alone should not create law".? Explain the
statement in the light of natural law.

Answer 1:-

Natural Law–Its Meaning and Definition

There is no unanimity about the definition and exact meaning of Natural Law. In
jurisprudence the term ‘Natural Law’ means those rules and principles which are supposed
to have originated from some supreme source other than any political or worldly authority.
It is basically a priori method different from empirical method, the forms, accepts things or
conclusions in relation to a subject as they are without any need or enquiry or observation
while empirical or a posteriori approach tries to find out the causes and reason in relation to
the subject matter. It symbolizes Physical Law of Nature based on moral ideals which has
universal applicability at all places and terms. It has often been used either to defend a
change or to maintain status quo according to needs and requirement of the time. For
example, Locke used Natural Law as an instrument of change but Hobbes used it to
maintain status quo in the society. The concepts of ‘Rule of Law’ in England and India and
‘due process’ in USA are essentially based on Natural Law. Natural Law is eternal and
unalterable, as having existed from the commencement of the world, uncreated and
immutable. Natural Law is not made by man; it is only discovered by him. Natural Law is
not enforced by any external agency. Natural Law is not promulgated by legislation; it is an
outcome of preaching of philosophers, prophets, saints etc. and thus in a sense, it is a higher
form of law. Natural Law has no formal written Code. Also there is neither precise penalty
for its violation nor any specific reward for abiding by its rules. Natural Law has an eternal
lasting value which is immutable. Natural Law is also termed as Divine Law, Law of
Nature, Law of God, etc. Divine Law means the command of God imposed upon men.
Natural Law is also the Law of Reason, as being established by that reason by which the
world is governed, and also as being addressed to and perceived by the rational of nature of
man. It is also the Universal or Common Law as being of universal validity, the same in all
places and binding on all peoples, and not one thing at Athens. Lastly in modern times we
find it termed as “moral law” as being the expression of the principles of morality. The
Natural Law denies the possibility of any rigid separation of the ‘is’ and ‘ought’ aspect of
law and believes that such a separation is unnecessarily causing confusing in the field of
law. The supporters of Natural Law argue that the notions of ‘justice’, ‘right’ or ‘reason’
have been drawn from the nature of man and the Law of Nature and, therefore, this aspect
cannot be completely eliminated from the purview of law. It has generally been considered
as an ideal source of law with invariant contents.

Evolution, Growth and Decline of Natural Law

The content of ‘Natural Law’ has varied from time to time according to the purpose for
33
which it has been used and the function it is required to perform to suit the needs of the time
and circumstances. Therefore, the evolution and development of ‘Natural Law’ has been
through various stages which may broadly be studied under the following heads:

(1) Ancient Period

(2) Medieval Period
(3) Renaissance Period
(4) Modern period

Ancient Period
Heraclitus (530 – 470 B.C.)
The concept of Natural Law was developed by Greek philosophers around 4th century B.C.
Heraclitus was the first Greek philosopher who pointed at the three main characteristic
features of Law of Nature namely,
(i) destiny,
(ii) order and
(iii) reason.
He stated that nature is not a scattered heap of things but there is a definite relation between
the things and a definite order and rhythm of events. According to him, ‘reason’ is one of
the essential elements of Natural Law.

Socrates (470 – 399 B.C.)

Socrates said that like Natural Physical Law there is a Natural or Moral Law. ‘Human
Insight’ that a man has the capacity to distinguish between good and bad and is able to
appreciate the moral values. This human ‘insight’ is the basis to judge the law.

Aristotle (384 – 322 B.C.)

According to him, man is a part of nature in two ways; firstly, he is the part of the creatures
of the God, and secondly, he possesses insight and reason by which he can shape his will.
By his reason man can discover the eternal principle of justice. The man’s reason being the
part of the nature, the law discovered by reason is called ‘natural justice’.

Natural Law in India

Hindu legal system is perhaps the most ancient legal system of the world. They developed a
very logical and comprehensive body of law at very early times. A sense of ‘Justice’
pervades the whole body of law. But the frequent changes in the political system and
government and numerous foreign invasions, one after the other prevented its systematic
and natural growth.

Medieval Period
Catholic philosophers and theologicians of the Middle Ages gave a new theory of ‘Natural
Law’. Though they too gave it theological basis, they departed from the orthodoxy of early
Christian Fathers. Their views are more logical and systematic.
(1) Law of God or external law,
(2) Natural Law which is revealed through “reason”,
34
 (3) Divine Law or the Law of Scriptures,
(4) Human Laws which we now called ‘Positive law’. Natural Law is a part of divine law. It
is that part which reveals itself in natural reason.
The Period of Renaissance
The period of renaissance in the history of development of Natural Law may also be called
the modern classical era which is marked by rationalism and emergence of new ideas in
different fields of knowledge.

Hugo Grotius (1583 – 1645)

Grotius built his legal theory on ‘social contract’. His view, in brief, is that political society
rests on a ‘social contract’. It is the duty of the sovereign to safeguard the citizens because
the former was given power only for that purpose. The sovereign is bound by ‘Natural
Law’.

Thomas Hobbes (1558 – 1679)

According to Hobbes, prior to ‘social contract’, man lived in chaotic condition of constant
fear. The life in the state of nature was “solitary, poor, nasty, brutish and short”. Therefore,
in order to secure self-protection and avoid misery and pain, men voluntarily entered into
contract and surrendered their freedom to some mightiest authority that could protect their
lives and property.

John Locke (1632 – 1704)

According to Locke, the state of nature was a golden age, only the property was insecure. It
was for the purpose of protection of property that men entered into the ‘social contract’.
Man, under this contract, did not surrender all his rights but only a part of them, namely, to
maintain order and to enforce the law of nature. His Natural Rights as the rights to life,
liberty and property he retained with himself.

Jean Rousseau (1712 – 1778)

Rousseau pointed out that ‘social contract’ is not a historical fact as contemplated by
Hobbes and Locke, but it is merely a hypothetical conception. Prior to the so called ‘social
contract’, the life was happy and there was equality among men.

Immanuel Kant (1724 – 1804)

The Natural Law philosophy and doctrine of social contract was further supported by Kant
and Fichte in 18th century. They emphasized that the basis of social contract was ‘reason’
and it was not a historical fact. Kant drew a distinction between Natural Rights and the
Acquired Rights and recognized only the former which were necessary for the freedom of
individual.

Modern Period
19th Century Hostility towards Natural Law
The Natural Law theory received a setback in the wake of 19th century pragmatism. The

35
profounder of analytical positivism, notably, Bentham and Austin rejected Natural Law on
the ground that it was ambiguous and misleading. The doctrines propagated by Austin and
Bentham completely divorced morality from law. In the 19th century, the popularity of
Natural Law theories suffered a decline. The ‘Natural Law’ theories reflected, more or less,
the great social economic and political changes which had taken place in Europe. ‘Reason’
or rationalism was the spirit of the 18th century thought. A reaction against this abstract
thought was overdue. The problems created by the new changes and individualism gave
way to a collectivist outlook. Modern skepticism preached that there are no absolute and
unchangeable principles. Priori methods of the natural law philosophers were unacceptable
in the emerging age of science. The historical researches concluded that social contract was
a myth. All these developments shattered the very foundation of the Natural Law theory in
19th Century. The historical and analytical approaches to the study of law were more
realistic and attracted jurists. They heralded a new era in the field of legal thought. In this
changed climate of thought it became difficult for the ‘Natural Law’ theories to survive.
Therefore, though solitary voices asserting the superiority of ‘Natural Law’ are still heard,
the 19th century was, in general, hostile to the ‘Natural Law’ theories.

20th Century Revival of Natural Law

Towards the end of the 19th century, a revival of the ‘Natural Law’ theories took place. It
was due to many reasons: First, a reaction against 19th century legal theories which had
exaggerated the importance of ‘positive law’ was due and theories which over-emphasized
positivism failed to satisfy the aspirations of the people because of their refusal to accept
morality and ‘reason’ as element of law; Second, it was realized that abstract thinking or a
priori assumptions were not completely futile; Third, the impact of materialism on the
society and the changed socio-political conditions compelled the 20th century legal thinkers
to look for some value-oriented ideology which could prevent general moral degradation of
the people. The World War 1 further shattered the western society and there was a search
for a value-conscious legal system. All these factors cumulatively led to revival of Natural
Law theory in its modified form different from the earlier one. The main exponents of the
new revived Natural Law were Rudolf Stammler, Prof. Rawls, Kohler and others.

Rudolf Stammler (1856 – 1938)

Stammler defined law as, “species of will, others-regarding, self-authoritative and
inviolable”. For him, a just law was the highest expression of man’ social life and aims at
preservation of freedom of individuals. According to him, the two fundamental principles
necessary for a just law were: (1) principles of respects, and (2) the principle of community
participation.

Professor Rawls
Professor Rawls made significant contribution to the revival of Natural Law in the 20th

36
century. He propounded two basic principles of justice, namely, (1) equality of right to
securing generalized wants including basic liberties, opportunities, power and minimum
means of subsistence; and (2) social and economic inequalities should be arranged so as to
ensure maximum benefit to the community as a whole.

Kohler
As a neo-Hegelian, Kohler defined law as, “the standard of conduct which in consequence
of the inner impulse that urges upon men towards a reasonable form of life, emanates from
the whole, and is forced upon the individual”. He says that there is no eternal law and the
law shapes itself as the society advances morality and culturally in course of evolution.

Lon Luvois Fuller (1902 – 1978)

He rejected Christian doctrines of Natural Law and 17th and 18th century rationalist
doctrines of Natural Rights. He did not subscribe to a system of absolute values. His
principal affinity was, with Aristotle. He found a “family resemblance” in the various
Natural Law theories, the search for principles of social order.

Hart
Hart, the leader of contemporary positivism, though critical of Fuller’s formulation, has
attempted to restate a national law position from a semi-sociological point of view. Hart
points out that there are certain substantive rules which are essential if human beings are to
live continuously together in close proximity. “These simple facts constitute a case of
indisputable truth in the doctrines of natural law”.

Finnis
Finnis who in his writing ‘Natural Law and Natural Rights’, restated the importance of
natural law. For Finnis, ‘Natural’ is the set of principles of practical reasonableness in
ordering human life and human community. Drawing on Aristotle and Aquarius, Finnis sets
up the proposition that there are certain basic goods for all human beings. The basic
principles of Natural Law are pre-moral. These basic goods are objective values in the sense
that every reasonable person must assent to their value as objects of human striving.

Conclusion
This brief survey of the content of ‘Natural Law’ has varied from time to time. It has been
used to support almost any ideology, absolutism, individualism and has inspired revolutions
and bloodshed also. It has greatly influenced the positive law and has modified it. The law
is an instrument not only of social control but of social progress as well, it must have certain
ends. A study of law would not be complete unless it extends to this aspect also. The
‘Natural Law’ theories have essentially been the theories regarding the ends of law. The
‘Natural Law’ principles have been embodied in legal rules in various legal systems and
have become their golden principles.

37
Question 2:- Explain the meaning and scope of jurisprudence.?
Answer :-

Jurisprudence comes from the Latin word ‘jurisprudentia’ which means the knowledge of
law. The earliest definition of this term was provided by Bentham and Austin. The scope of
jurisprudence has widened manifold since then and now it encompasses the entire gamut of
law, not just positive laws. It is the study of the fundamental principles of law. The
creativity of the judiciary in interpreting the law to serve social welfare ends of the State has
also contributed in significantly expanding the scope of jurisprudence.

Definition of Jurisprudence

To understand the meaning and the definition of jurisprudence let us first see its etymology.
The word ‘jurisprudence’ is the English derivation of the Latin word ‘jurisprudentia’. The
translation of the word means the study, knowledge or skill with regards to the law.

Over the course of history, there have been many forms of the definition of jurisprudence.
Romans liked to call it the observation of all things human, combined with the knowledge of
the just and unjust. Salmond defines it as the science of the very first principles of civil law.

It is also known as the science or philosophy of positive law. There is no one correct definition
of jurisprudence, all of these are correct in their own regard.

The concept of law and justice has its beginning in the era of ancient Rome and ancient India.
And since these prehistoric times to today in the 21st century, it has evolved and grown
through many stages.

Some of the first mentions of the concept of jurisprudence are found in ancient Indian texts
known as the Dharmashastra texts. In these times there was a great belief in the concept of
dharmas and morals.

Then in ancient Rome, the concepts developed further. They had forms of traditional law as
we see today. Along with this, citizens also abided by a body of oral laws and customs and
regulations.

The Roman empire leads to the rise of various schools of law. The practice of law became
more advanced and academic.

38
Importance of the Study of Jurisprudence
The study of jurisprudence is not only limited to the development and evolution of law. The
academics who study jurisprudence also make great contributions to the fields of other social
sciences like the political and social fields. This leads to the overall development of society.

The study of jurisprudence also helps uncomplicate some of the concepts and complexities of
the legal world. It makes them more manageable and rational and thus easier to understand.
This can also lead to a more effective practice of law.

We often call jurisprudence the grammar of the law. It will help a lawyer the basic ideas and
reasoning behind the written law. It helps them better understand the fundamentals of the law
and help them figure out the actual rule of the law.

The lawyer and judges can use jurisprudence as a guide to correctly interpret certain laws that
require interpretation. The study of jurisprudence does not serve only academic purposes. It
will help lawyers and other practitioners in the practical world as well.

It sharpens their legal knowledge. Also, it trains the mind to find alternate routes and channels
of thought in case of difficulty. The law can mean more than one thing, and this exploration is
a direct effect of the study of jurisprudence.

Scope of Jurisprudence

There is no unanimity of opinion regarding the scope of jurisprudence.

Different authorities attribute different meanings and varying premises to law and that
causes difference opinions with regard to the exact limit of the field covered by
jurisprudence . Jurisprudence has been so defined as to cover moral and religious precepts
also and that has created confusion . It goes to the credit to Austin that he distinguished law
from morality and theology and restricted the term to the body of the rules set and enforced
by the sovereign or supreme law making authority within the realm. Thus the scope of
jurisprudence was limited to the study of the concepts of positive law and ethics and
theology fall outside the province of jurisprudence.

There is tendency to widen the scope of jurisprudence and at the present we include
what was previously considered to be beyond the provinces of jurisprudence. The present
view is that scope of jurisprudence can not be circumcised or regimented. It includes all
concepts of of human order and human conduct in state ans society. Anything that concerns
order in the state and society falls under the domain jurisprudence. P.B. Mukharji writes
that new jurisprudence is " both intellectual and idealistic abstraction as well as

39
behavioristic study of man in society. It includes political , social, economic and cultural
ideas. It covers the study of man in relation to the state and society."

Thurman W. Arnold defines jurisprudence " as the shining but unfulfilled dream of a world
governed by reason . For some , it lies buried in a system , the details of which they do not
know. for some, familiar with the details of the system, it lies in the depth of an unreal
literature . for others , familiar with its literature , it lies in the hope of a future
enlightenment. for all , it is just around the corner "

The view of lord radcliffe is that jurisprudence is a part of history , a part of economics
and sociology, a part of ethics and a philosophy of life.

Karl Llewellyn observes -

" Jurisprudence as big as law-and bigger".

Question 3:- Discuss how far legislation is superior to other sources of law.?
Answer 3:-

Source of Law

The main sources of law in India are the Constitution, statutes (legislation), customary law
and case law. Statutes are enacted by Parliament, State legislatures and Union Territory
legislatures. Besides, there is a vast body of laws known as subordinate legislation in the
form of rules, regulations as well as bye-laws made by Central/State governments and local
authorities like municipal corporations, municipalities, gram panchayats and other local
bodies. This subordinate legislation is made under the authority conferred or delegated
either by Parliament or State or Union Territory legislatures concerned. Judicial decisions
of superior courts like Supreme Court and High Courts are important sources of law.
Decisions of Supreme Court are binding on all courts within the territory of India. Local
customs and conventions which are not against statute, morality, etc., are also recognised
and taken into account by courts while administering justice in certain spheres.

Statute law or Statutory law is a law that is created by the legislation, for e.g. the State
Legislature. A statute is a formal act of the legislature in written form. A legislature is a
kind of assembly with the power to pass, amend and repeal laws. Statutory laws are the
basic framework of the modern legal system. Supreme legislation and subordinate
legislation are two types of the legislature.

Legislative powers are divided into three lists: Union list, State list, and concurrent list.
40
Types of Legislature

1. Supreme Legislation

2. Subordinate Legislation

Supreme Legislation

The Constitution of India is the supreme authority in regards to all matters relating to the
executive, legislature and judiciary. Supreme legislation is that legislation which derives its
power straight from the constitution. It cannot be challenged by any other legislative power.

In the Indian legal system, Acts of Parliament, Ordinances, laws made by President and
Governors in the limits of their authority given by the Constitution are part of the supreme
legislation. In India, the Parliament possesses the authority of supreme legislation.

Subordinate Legislation

Subordinate legislation is any other legislation which is lower in authority from supreme
legislation and derives its power from any authority other than the sovereign power.

Whereas, legislation created by authorities like corporations, municipalities, universities

under the authority of supreme legislation is part of subordinate legislation

The judiciary has been given legislative powers as well. Superior courts are allowed to
make rules to regulate their own function and administration.

The executive’s main purpose is to enforce the law. It is also given legislative power in
some cases to make rules. This type of subordinate legislation is also called executive or
delegated legislation.

Municipal corporates enjoy limited power that has been given by the legislation to make
rules and bye-laws for areas under their jurisdiction. In certain cases, the State gives
authority to autonomous bodies like universities to make their bye-laws which are enforced
by a court of justice.

However, the rule-making power of the executive is very limited in its scope. The rules
made by the executive are placed on both the Houses of the Parliament and are then
considered to be approved by the legislature. These rules then become part of the laws.

When a conflict arises in relation to the validity of rules made the executive, courts have the
authority to give judgement on any of the rules made by the executive so they do not exceed
their authority delegated to them under the parent act.

41
Legislative Powers

The legislative powers of centre and state are clearly defined in the constitution. These
powers are split into three different lists.

Union List: The Union list consists of 100 items on which only the Parliament has exclusive
powers legislation because of their concern to the Centre.

State List: The State list consists of 61 items where the state legislative assembly has the
authority to make laws that would be applicable in that particular state. However, under
certain circumstances, the parliament also has legislative powers in matters of the state list.

Concurrent List: The Concurrent List consists of 52 items where both the parliament and
the state legislature have the authority to make their own laws under their own domains
because it concerns both the parties.

Chief Advantages of Legislation over Precedent as Sources of Law

1. Abrogative Power:

Legislation is both constitutive and abrogative whereas precedent merely possesses

constitutive efficacy. Legislation is not only a source of law, but it is equally effective in
amending or annulling the existing law.

Precedent, on the other hand, cannot abrogate the existing rule of law although it may
produce very good law and in some respects better than legislation. What it does, it docs
once for all. It cannot retrace its steps. Legislation as a destructive and reformative agent
has no equal.

2. Efficiency:

Legislation allows an advantageous division of labour by dividing the two functions of

making the law and administering it. This results in increased efficiency. President,
however, unites those two functions in the same hands.

3. Declaration:

Justice demands that law should be known before they are applied and enforced by the law
courts, but the ease law operates retrospectively, being applied to facts which are prior in
date to the law itself. Statute law is seldom retrospective in its operation.

Then legislation withstands the test of an interpretation of the statute by the courts of
justice. If any alterations are proposed in the enacted law, they are published and opinions
invited. Case law, on the contrary, is created and declared at one and the same time.

42
4. Provision for future cases:

Legislation can make rules in anticipation for cases that have not as yet arisen, whereas
precedent must wait for the occurrence of some dispute before the court can create any
definite rule of law. Precedent is dependent on, and legislation is independent of, the
accidental course of legislation.

Legislation can till up vacancy or settle a doubt in legal system as soon as the defect is
Drought to the notice of the legislature. This is not possible in the case of precedent. Case
law, therefore, is incomplete, uncertain and unsystematic.

5. Form:

Legislation is superior in form brief, clear, easily accessible and understandable, whilst
valuable part of case law has to be extracted from a ton of dross. One has to wade through
the whole judgment before the ratio decided can be found out or case law discovered.
Figuratively, as Salmond observes, ease law is gold in mine a few grams of precious metal
to the ton of useless material while statute law is coin of the realm, ready for immediate use.

Conclusion
In the Indian legal system, Acts of Parliament, Ordinances, laws made by President and
Governors in the limits of their authority given by the Constitution are part of the supreme
legislation because they supreme authority. They are the highest law-making authority in
the Indian Legal System.

SHORT NOTES
Question 1:- Law as a command.?
Answer 1:-

Austin defined law by saying that it is the “command of the sovereign”.

“Commands” involve an expressed wish that something be done, and “an evil” to be
imposed if that wish is not complied with.

The “sovereign” is defined as a person (or determinate body of persons) who receives
habitual obedience from the bulk of the population, but who does not habitually obey any
other (earthly) person or institution. Austin thought that all independent political societies,
by their nature, have a sovereign.

43
In Thomas Hobbes’ and John Austin’s legal positivism, the state is perceived as the creator
and enforcer of the law who is therefore, vested with the power to “inflict an evil or pain in
case its desire is disregarded”. Therefore, the law is the expression of the will of the state
laying down the rules of action upheld by force. But this does not mean that the state can do
no wrong in the expression and enforcement of its will, however, even if a wrong is done by
the state, no right can be claimed against it.

COMMAND THEORY OF LAW

Austin’s particular theory of law is often called the “command theory of law” because the
concept of command lies at its core. Positive law has a criterion of its own, namely, the
philosophy of legal positivism, which rests on the triune concepts of sovereign, command,
and sanction. This simply means that any violation of the command issued by the supreme
political superior or the sovereign is an infraction thereof and subject to sanction.

Austin writes that “Every law, or rule, is a command”9; this is, on Austin’s view, the “key
to the sciences of jurisprudence and morals.”10 In order to distinguish civil law from other
rules, Austin claims that it is the commands given by political superiors—sovereigns—to
political inferiors—subjects—that make for civil law.11 Thus Austin holds that civil law
consists in commands laid down by the sovereign for that sovereign’s subjects.

For Austin, a command is an expression of a person’s desire that some other person perform
some action. This is not sufficient to distinguish commands from other directives—
requests, pleas, and the like. On Austin’s view, what marks the difference between
commands and other directives is that the person expressing the desire vis-à-vis the other’s
conduct also expresses the intention to visit upon the commanded party an evil of some
sort—a “sanction”—if he or she fails to comply. It is this liability to a sanction’s being
imposed on the commanded by the commander that makes it true, on Austin’s view, that
one who is commanded to do something is “bound” or “obliged” to perform, and why the
performance counts as a “duty.”

Commands, according to Austin, always involve three things (Austin [1832] 1955, 17):

1. a desire concerning someone’s behavior

2. an expression of that desire
3. a sanction, threatened harm for non-compliance

For Austin, the terms “command,” “sanction,” and “duty” (or “obligation”) are all defined
in terms of one another. To receive a command is equivalent to being threatened with a
sanction and being threatened with a sanction is equivalent to having a duty (Austin [1832]
1955, 14–18). This, according to Austin, is why people are obliged to obey the law.

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Question 2:- Mischief Rule.?
ANSWER 2:-

The mischief rule of statutory interpretation is the oldest of the rules. The mischief rule was
established in Heydon’s Case. In Re Sussex Peerage, it was held that the mischief
rule should only be applied where there is ambiguity in the statute. Under the mischief
rule the court’s role is to suppress the mischief the Act is aimed at and advance the remedy.

Judges in England generally apply three basic rules of statutory interpretation, and similar
rules are also used in other common law jurisdictions. The literal rule, the golden rule and
the mischief rule. Although judges are not bound to apply these rules, they generally take
one of the following three approaches, and the approach taken by any one particular judge
is often a reflection of that judge’s own philosophy.

The Literal Rule

Under the literal rule (also: the ordinary meaning rule; the plain meaning rule), it is the task
of the court to give a statute’s words their literal meaning regardless of whether the result is
sensible or not. In a famous judgment, Lord Diplock in Duport Steel v Sirs (1980) said “The
courts may sometimes be willing to apply this rule despite the manifest absurdity that may
result from the outcome of its application.” The literal rule is often applied by orthodox
judges who believe that their constitutional role is limited to applying laws as enacted by
Parliament. Such judges are wary of being seen to create law, a role which they see as being
strictly limited to the elected legislative branch of government. In determining the intention
of the legislature in passing a particular statute, this approach restricts a judge to the so
called black letter of the law. The literal rule has been the dominant approach taken for over
100 years.

The Golden Rule

The golden rule (also: the British rule) is an exception to the literal rule and will be used
where the literal rule produces the result where Parliament’s intention would
be circumvented rather than applied. In Grey v Pealson (1857), Lord Wensleygale said :
“The literal rule should be used first, but if it results in absurdity, the grammatical and
ordinary sense of the words may be modified, so as to avoid absurdity and inconsistency,
but no further.”

One example of the application of the golden rule is the case of R v Allen –
Defendant is charged with bigamy, an offence prohibited in Offences Against Persons Act
1861 which reads “whoever is married, marries another commits bigamy.” The court held
that the word “marries” need not mean a contract of marriage as it was impossible for a

45
person who is already married to enter into another valid contract of marriage. Hence, the
court interpreted it as “going through marriage ceremony”.

The Mischief Rule

The final rule of statutory interpretation is the mischief rule, under which a judge attempts
to determine the legislator’s intention; what is the “mischief and defect” that the statute in
question has set out to remedy, and what ruling would effectively implement this remedy?
The classic statement of the mischief rule is that given by the Barons of the Court of
Exchequer in Heydon’s Case (1854): “…for the sure and true interpretation of all statutes in
general, four things are to be discerned and considered:

1. What was the common law before the making of the Act?
2. What was the mischief and defect for which the common law did not provide?
3. What remedy the Parliament hath resolved and appointed to cure the disease of
the Commonwealth?
4. The true reason of the remedy; and then the office of all the judge is always to make
such construction or shall suppress subtle inventions and evasions for continuance of the
mischief and pro private commodo, and to add force and life to the cure and remedy,
according to the true intent of the makers of the Act, pro bono publico.

This system of relying on external sources such as the common law in determining the true
intention of the parliament is now seen as part of the purposive approach, the approach
generally taken in the civil law jurisdictions of mainland Europe. Although the literal
approach has been dominant in common law systems for over a century, judges now appear
to be less bound by the black letter of the law and are more willing to try to determine the
true intention of the Parliament. The task of the judge is now seen as being give effect to the
legislative purpose of the statute in question.

Sodra Devi v. Commr. Of Income Tax

By s 16(3) of the Indian Income Tax Act 1922, ‘In computing the total income of any
individual for the purpose of assessment, there shall be included so much of the income of a
wife or minor child of such individual as arises indirectly or directly’ In CIT v Sodra
Devi the court observed that the legislature was guilty of using an ambiguous term. There is
no knowing with certainly as to whether the legislature meant to enact these provisions with
reference only to a male of the species using the words ‘any individual’ or ‘such individual’
in the narrower sense of the term indicated above or intended to include within the
connotation of the words ‘any individual’ or ‘such individual’ also a female of the species.

Advantages and Disadvantages of Mischief Rule

Advantages:
46
1) The Law Commission sees it as a far more satisfactory way of interpreting acts as
opposed to the Golden or Literal rules.

2) It usually avoids unjust or absurd results in sentencing.

3) Closes loopholes

4) Allows the law to develop and adapt to changing needs example Royal College of
Nursing v DHSS

Disadvantages:

1) It is seen to be out of date as it has been in use since the 16th century, when common
law was the primary source of law and parliamentary supremacy was not established.

2) It gives too much power to the unelected judiciary which is argued to be

undemocratic.

3) Creates a crime after the event example Smith v Hughes, Elliot v Grey thus infringing
the rule of law.

4) Gives judges a law making role infringing the separation of powers and Judges can
bring their own views, sense of morality and prejudices to a case example Smith v
Hughes, DPP v Bull.

Conclusion
As it can be seen from the case, mischief rule can be applied differently by different judges.
It is mainly about the discretion and understanding of the person applying it. Though, it as a
far more satisfactory way of interpreting acts as opposed to the Golden or Literal rules. It
usually avoids unjust or absurd results in sentencing but it also seen to be out of date as it
has been in use since the 16th century, when common law was the primary source of law
and parliamentary supremacy was not established. It gives too much power to the unelected
judiciary which is argued to be undemocratic. In the 16th century, the judiciary would often
draft acts on behalf of the king and were therefore well qualified in what mischief the act
was meant to remedy.

This is not often the case in modern legal systems. The rule can make the law uncertain,
susceptible to the slippery slope. Therefore Purposive interpretation was introduced as a
form of replacement for the mischief rule, the plain meaning rule and the golden rule to
determine cases. The purposive approach is an approach to statutory and constitutional
interpretation under which common law courts interpret an enactment (that is, a statute, a
part of a statute, or a clause of a constitution) in light of the purpose for which it was
enacted.

47
Question 3:- Theories Of Punishment.?
Answer 3:-

Each society has its own way of social control for which it frames certain laws and also
mentions the sanctions with them. These sanctions are nothing but the punishments. ‘The
first thing to mention in relation to the definition of punishment is the ineffectiveness of
definitional barriers aimed to show that one or other of the proposed justifications of
punishments either logically include or logically excluded by definition.’

Punishment has the following features:

1- It involves the deprivation of certain normally recognized rights, or other measures

considered unpleasant
2- It is consequence of an offence
3- It is applied against the author of the offence
4- It s applied by an organ of the system that made the act an offence.
The immediate consequence that follows a criminal act is known as punishment. Thus,
punishment is defined as suffering, loss, pain, or any other penalty that is inflicted on a
person for the crime by the concerned authority. There are different theories of punishment
in law.

Theories of Punishment
There are different kinds of punishment that a person can face. In order to understand them,
first, we need to understand the theories of the punishment. There are majorly four theories
of punishment.

These theories are the

1. deterrent theory
2. retributive theory
3. preventive theory
4. reformative theory

We will discuss these theories in length below.

Deterrent Theory

The retributive theory assumes that the punishment is given only for the sake of it. Thus, it
suggests that evil should be returned for evil without taking into consideration any
consequences. There are two theories in which this theory can be divided further. They are
specific deterrence and general deterrence.

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In specific deterrence, punishment is designed such that it can educate the criminals. Thus,
this can reform the criminals that are subjected to this theory. Also, it is maintained that the
punishment reforms the criminals. This is done by creating a fear that the punishment will
be repeated.

While a general deterrence is designed to avoid future crime. So, this is done by making an
example of each defendant. Thus, it frightens the citizens to not do what the defendant did.

Retributive Theory

Retribution is the most ancient justification for punishment. This theory insists that a person
deserves punishment as he has done a wrongful deed. Also, this theory signifies that no
person shall be arrested unless that person has broken the law. Here are the conditions
where a person is considered as an offender are:

The penalty given will be equivalent to the grievance caused by the person.

Performed a crime of certain culpability.

That similar persons have been imposed for similar offenses.

That the action performed was by him and he was only responsible for it. Also, he had full
knowledge of the penalty system and possible consequences.

Preventive Theory

This theory has used a restraint that an offender if repeats the criminal act is culpable for
death, exile or imprisonment. The theory gets its importance from the notion that society
must be protected from criminals. Thus, the punishment here is for solidarity and defense.

The modern criminologists saw the preventive theory from a different view. They first
realized that the social and economic forces should be removed from society. Also, one
must pay attention to individuals who show anti-social behavior. This is because of
psychological and biological handicaps.

Reformative Theory

Deterrence and retributive are examples of classical and non-classical philosophies. The
reformative theory was born out of the positive theory that the focal point of crime is
positive thinking. Thus, according to this theory, the objective of punishment needs to be
reformation by the offender.

So, this is not a punishment virtually but rather a rehabilitative process. Thus, this process
helps in making a criminal a good citizen as much as possible. Furthermore, it makes the
citizen a meaningful citizen and an upright straight man.

49
Conclusion

The researcher at the end of this project finds punishment as a method of social control. He
would like to summarize his understanding about the theories of punishment:

- There is an attempt to portray punishments as a method of inflicting of unpleasant

circumstances over the offender.

- Though certain theories like the reformative and preventive rely upon humanitarian modes
of punishment, but these have a weakness against the hardcore criminals.

- Punishments such as the retributive and deterrence though the use of fear as an instrument
to curb the occurrence of crime helps in controlling the criminals up to a certain extent. As
these employ the idea of revenge and vengeance these are much more harsher than others.

50
 LABOUR LAW II

Question 1:- Discuss the constitutional dimensions of industrial

relations and labour.?
Answer 1:-

CONSTITUTIONAL DIMENSIONS OF INDUSTRIAL RELATIONS

Industrial Disputes Act, 1947

The Industrial Disputes Act, 1947 (the "ID Act") has been enacted for the investigation and
settlement of industrial disputes in any industrial establishment.

The Industrial Disputes Act defines "Industrial dispute" as a dispute or difference between
workmen and employers or between workmen and workmen, which is connected with
employment or non-employment or the terms of employment or with the conditions of
labour. Dismissal of an individual workman is deemed to be an industrial dispute.

The ID Act provides for the constitution of the Works Committee, consisting of employers
and workmen, to promote measures for securing and preserving amity and good relations
between the employer and the workmen and, to that end, endeavours to resolve any material
difference of opinion in respect of such matters.

The ID Act provides for the appointment of Conciliation Officers, Board of Conciliation,
Courts of Inquiry, Labour Courts, Tribunals, and National Tribunals for settlement of
disputes. Another method recognised for settlement of disputes is through arbitration. The
Industrial disputes Act provides a legalistic way of settling disputes. The goal of preventive
machinery as provided under the Act is to create an environment where the disputes do not
arise at all. The ID Act prohibits unfair labour practices which are defined in the Fifth
Schedule—strikes and lockouts (except under certain defined conditions and with proper
notice). It also provides for penalties for illegal strikes and lockouts and unfair labour
practices and provisions regarding lay off and retrenchment as well as compensation
payable thereof.

The ID Act provides that an employer who intends to close down an industrial
establishment shall obtain prior permission at least ninety days before the date on which he
intends to close down the industrial establishment, giving the reasons thereof.

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Trade Unions Act, 1926

The Trade Unions Act, 1926 (the "Trade Unions Act") seeks to provide for the registration
of Trade Unions in India and for the protection of the same. Further, the Trade Unions Act
also in certain respects defines the law relating to registered Trade Unions like mode of
registration, application for registration, provisions to be contained in the rules of a Trade
Union, minimum requirement for membership of a Trade Union, rights and liabilities of
registered Trade Unions, etc.

CONSTITUTIONAL DIMENSIONS OF LABOUR

The Ministry of Labour and Employment seeks to protect and safeguard the interests
of workers in general and those who constitute the poor, deprived and disadvantaged
sections of the society, in particular, with due regard to creating a healthy work
environment for higher production and productivity, and developing and coordinating
vocational skill training and employment services. Government's attention is also focused
on promotion of welfare activities and providing social security to the labour force both in
the organised and unorganised sectors, in tandem with the process of liberalisation. These
objectives are sought to be achieved through enactment and implementation of various
labour laws, which regulate the terms and conditions of service and employment of
workers.

The following are the thrust areas of the Government concerning labour laws:

1. Labour policy and legislation;

2. Safety, health and welfare of labour;
3. Social security of labour;
4. Policy relating to special target groups such as women and child labour;
5. Industrial relations and enforcement of labour laws in the central sphere;
6. Adjudication of industrial disputes through Central Government Industrial Tribunals-
cum-Labour Courts and National Industrial Tribunals;
7. Workers' education;
8. Labour and employment statistics;
9. Emigration of labour for employment abroad;
10.Employment services and vocational training;
11.Administration of central labour and employment services; and
12.International cooperation in labour and employment matters.

India has a number of labour laws that govern almost all the aspects of employment
such as payment of wages, minimum wages, payment of bonus, payment of gratuity,
contributions to provident fund and pension fund, working conditions, accident
52
compensations, etc. The Government has enacted certain central legislations, viz, the
Employees Provident Fund and Miscellaneous Provisions Act, Employees State Insurance
Act, Payment of Wages Act, Minimum Wages Act, Equal Remuneration Act, Maternity
Benefits Act, etc.

The main Articles of our Indian Constitution which protects , supports , and act as a
guideline to various labour laws for their effective implementation and functioning. The
main Articles are Art 14, 16,19(1)(c), 21, 23. 24, 32, 35,38, 39, 39 A, 41, 42, 43, 43 –A , 46,
47, 226,227.

Art 14 of the Indian Constitution explains the concept of Equality before law . The concept
of equality does not mean absolute equality among human beings which is physically not
possible to achieve. It is a concept implying absence of any special privilege by reason of
birth, creed or the like in favour of any individual, and also the equal subject of all
individuals and classes to the ordinary law of the land.

In Randhir Singh v. Union of India, the Supreme Court has held that although the
principle of 'equal pay for equal work' is not expressly declared by our Constitution to be a
fundamental right, but it is certainly a constitutional goal under Articles 14, 16 and 39 (c) of
the Constitution. This right can, therefore, be enforced in cases of unequal scales of pay
based on irrational classification. The decision in Randhir Singh's case has been followed in
a number of cases by the Supreme Court.

Art 19 (1) ( c) speaks about the Fundamental right of citizen to form an associations and
unions.. Under clause (4) of Article 19, however, the State may by law impose reasonable
restrictions on this right in the interest of public order or morality or the sovereignty and
integrity of India. The right of association pre-supposes organization. It as an organization
or permanent relationship between its members in matters of common concern. It thus
includes the right to form companies, societies, partnership, trade union,[8] and political
parties.

The Articles 21, 23, 24, 38, 39, 39-A, 41, 42, 43, 43-A and 47 of the Constitution, are
calculated to give an idea of the conditions under which labour can be had for work and
also of the responsibility of the Government, both Central and State, towards the labour to
secure for them social order and living wages, keeping with the economic and political
conditions of the country and dignity of the nation.

Articles 21, 23 and 24 form part of the Fundamental Rights guaranteed under Part III of the
Constitution. Articles 38, 39, 39-A, 41, 42, 43, 43-A and 47 form part of the Directive
Principles of State Policy under Part IV of the Constitution.

53
In Deena v. Union of India it was held that labour taken from prisoners without paying
proper remuneration was "forced labour" and violative of Art. 23 of the Constitution. The
prisoners are entitled to payment of reasonable wages for the work taken from them and the
Court is under duty to enforce their claim.

It is clear from Article 32 (1) that whenever there is a violation of a fundamental right any
person can move the Court for an appropriate remedy. Traditional rule of locus standi that a
petition under Article 32 can only be filed by a person whose fundamental right is infringed
has now been considerably relaxed by the Supreme Court in its recent rulings. The Court
now permits public interest litigations or social interest litigations at the instance of 'public
spirited citizens' for the enforcement of Constitutional and other legal rights of any person
or group of persons who because of their poverty or socially or economically disadvantaged
position are unable to approach the Court for relief. Once the fundamental rights of the
labourers is infringed , They could approach the Supreme Court by issuing writ under Art
32 and 226.

Articles 38, 39, 39-A, 41, 42, 43, 43-A and 47 of the Constitution embody the Directive
Principles of State Policy which though cannot be enforced through a court of law are
nevertheless fundamental in the governance of the country, casting a duty on the State to
apply those principles in making laws. The directive principles are therefore subordinate to
the fundamental rights guaranteed under Part III of the Constitution.

Articles 226 and 227.—The power of superintendence under Article 227 is of an

administrative as well as of judicial nature. If necessary, the High Court can interfere with
the administrative orders of inferior courts.

The principal grounds for interference under Article 227 are the following

(a) want or excess of jurisdiction;

(b) failure to exercise jurisdiction;

Question 2:- Define wages and bonus. Mention the kind of wages.?

Answer 2:-

Laws relating to Wages

Minimum Wages Act, 1948

Payment of Wages Act, 1936

Payment of Bonus Act, 1965

Section 2(21) in The Payment of Bonus Act, 1965

54
(21) “salary or wage” means all remuneration (other than remuneration in respect of over-
time work) capable of being expressed in terms of money, which would, if the terms of
employment, express or implied, were fulfilled, be payable to an employee in respect of his
employment or of work done in such employment and includes dearness allowance (that is
to say, all cash payments, by whatever name called, paid to an employee on account of a
rise in the cost of living), but does not include—
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or of supply of light, water, medical attendance
or other amenity or of any service or of any concessional supply of foodgrains or other
articles;
(iii) any travelling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund
or for the benefit of the employee under any law for the time being in force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to
the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.

Payment of Wages Act

The main objective for the introduction of the Payment of Wages Act, 1936, is to avoid
unnecessary delay in the payment of wages and to prevent unauthorized deductions from
the wages.

Applicability of Payment of Wages Act

As per section 1(6) of the Payment of Wages Act, the wages averaging less than INR 6,500
per month are covered and protected by the Act. Further, the Act is applicable to the
payment of wages to persons employed in factories, upon railways, or in other
establishment as specified in the Payment of Wages Act.

Definition of Wages

The term wages has been defined as all remuneration (whether by way of salary,
allowances, or otherwise) payable to a person employed in respect of his employment or of
work done in such employment.

55
Under the Payment of Wages Act, wages include:

 Any remuneration payable under any award or settlement between the parties or
order of a Court;
 Any remuneration to which the person employed is entitled in respect of overtime
work or holidays or any leave period;
 Any additional remuneration payable under the terms of employment (whether called
a bonus or by any other name);
 Any sum which by reason of the termination of employment of the person employed
is payable under any law, contract or instrument which provides for the payment of
such sum, whether with or without deductions, but does not provide for the time
within which the payment is to be made;
 Any sum to which the person employed is entitled under any scheme framed under
any law for the time being in force, but does not include:
o Any bonus (whether under a scheme of profit sharing or otherwise) which does
not form part of the remuneration payable under the terms of employment or
which is not payable under any award or settlement between the parties or
order of a Court;
o The value of any house-accommodation, or of the supply of light, water,
medical attendance or other amenity or of any service excluded from the
computation of wages by a general or special order of the appropriate
Government;
o Any contribution paid by the employer to any pension or provident fund, and
the interest which may have accrued thereon;
o Any travelling allowance or the value of any travelling concession;
o Any sum paid to the employed person to defray special expenses entailed on
him by the nature of his employment; or
o Any gratuity payable on the termination of employment.

Type of wages
The main types of wages are:

1. Subsistence wage;

2. Minimum wage;

3. Fair Wage; and

4. Living Wage

Subsistence Wage: - The wage that can meet only bare physical needs of a worker and his
family is called subsistence wage.

56
Minimum Wage: - Minimum wage is the wage that is able to provide not only for bare
physical needs but also for preservation of efficiency of worker plus some measure of
education, health and other things.

Fair Wage:- Fair wages is an adjustable step that moves up according to the capacity of the
industry to pay, and the prevailing rates of wages in the area of industry.

Living Wage:- Living wage is that which workers can maintain the health and decency, a
measure of comfort and some insurance against the more important misfortune of lie.

In any event the minimum wage must be paid irrespective of the extent of profits, the
financial condition of the establishment or the availability of workmen at lower wages.

The wages must be fair, i.e. sufficiently high to provide standard family with food, shelter,
clothing, medical care and education of children appropriate to the workmen. A fair wage
lies between the minimum wage and the living wage which is the goal. Wages must be paid
on an industry wise and region basis having due regard to the financial capacity of the unit.

Question 3:- Explain the protection of child labour and contract

labour.?
Answer 3:-

PROTECTION OF CHILD LABOUR

The main object of the Child Labour ( Prohibition and Regulation) Act, 1986 is to address
the social concern and prohibit the engagement of children who have not completed 14th
year of age in certain employments and to regulate the conditions of work of children has
been prohibited in occupations relating to

(i) transport of passengers, goods or mails by railways

(ii) beedi making

(iii) carpet weaving

(iv) manufacturing of matches, explosives and fire

(v) soap manufacture

(vi) wool cleaning

(vii) building and construction industry.

57
The Government has also prohibited employment of children in the following occupations
or processes:

(i) Abattoirs/Slaughter houses

(ii) hazardous processes and dangerous operations as notified

(iii) printing, as defined,

(iv) cashew and cashew nut descaling and processing

(v) soldering processes in electronic industry.

The Act prohibits employment of child in about 13 occupations and about 51

processes. The Fundamental Rights mentioned in the Constitution of India (the law of land)
in the Article 24 under Right Against Exploitation also mentions for prohibition of
employment of children in factories, etc.

The Act provides that no child shall be permitted to work between 7 p.m. and 8 a.m. and
shall not be permitted to work over time. No child shall work for more than 3 hours before
he has an interval of one hour. Spread over has been fixed at six hours. A cannot work in
more than one establishment on any day. A weekly holiday is allowed. The Act also
provides health and safety measures for the children. Section 13 of the Act describes to
provide child workers facilities of drinking water, latrines and urinals, cleanliness, disposal
of wastes and effluents, ventilation and temperature, etc. should be provided by the
employer. Measures for safety from dust and fume, artificial humidification, fencing of
machinery etc., also need to be provided by the employer.

The employer is required to notify the Factory Inspectors in case he engages a child for
employment. Production of certificate of age is also required under the rules of the Act.

Maintenance of Register:

Every occupier shall maintain in respect of children employed or permitted to work in any
establishment, a register to be available for inspection by an Inspector at all times during
working hours or when work is being carried on in any such establishment, showing –

1. The name and date of birth of every child so employed or permitted to work
2. Hours and periods of work of any such child and the intervals of rest to which he is
entitled
3. The nature of work of any such child
4. Such other particulars as may be prescribed.

58
Provisions relating to Child workers under various Acts:

Factories Act, 1948 :

Section 22 of the Act mentions that no young person can be shall be allowed to clean,
lubricate or adjust any part of machine which thereof would expose the young person to risk
of injury from any moving part either of that machine or of any adjacent machinery.

Section 23 of the Act defines that no young person is allowed to be employable on

dangerous machines.

Section 27 of the Act prohibits employment of children in any part of a factory for pressing
cotton in which a cotton-opener is at work.

The Beedi and Cigar Workers (Conditions of Employment) Act, 1966 :

Section 24 of the Act defines that employment of child under in this industry is strictly
prohibited under this Act.

Plantation Labour Act, 1951 :

Section 25 of the Act specifies that Women and children can be employed only between the
hours of 6a.m and 7p.m. They can be employed beyond these hours only with the
permission of the State Government.

Domestic Workers (Registration Social Security and Welfare) Act, 2008 :

Section 14 of the Act specifies that no child shall be employed as a domestic worker or for
any such incidental or ancillary work which is prohibited under any law.

Provision for Penalties under the Act:

Any employer:

 For employing any child in contravention of the provisions of the Act –

imprisonment for not less than 3 months extending to 1 year or with fine not less than
Rs. 10000 extending to Rs. 20000, or both.
 For second offence of like nature - imprisonment for not less than 6 months which
may extend to 2 years.
 Failure to maintain a register - simple imprisonment which may extend to 1 month or
with fine which may extend to Rs. 10000, or both.

PROTECTION OF CONTRACT LABOUR:-

Contract Labour is one of the acute form of unorganized labour. Under the system of
contract labour workers may be employed through contractor on the contract basis.
Workmen shall be deemed to be employed as “contract labour” or in connection with the

59
work of an establishment when he is hired in or in connection with such work by or through
a contractor, with or without the knowledge of the principal employer. In this class of
labour the contractors hire men (contract labour) who do the work on the premises of the
employer, known as the principal employer but are not deemed to be the employees of the
principal employer. The range of tasks performed by such contract workers varies from
security to sweeping and catering and is steadily increasing. It has been felt, and rightly too,
that the execution of a work on contract through a contractor who deployed the contract
labour was to deprive the labour of its due wages and privileges of labour class.

The condition of contract labour in India was studied by various Commissions, Committees,
and also Labour Bureau, Ministry of Labour, before independence and after independence.
All these have found their condition to be appalling and exploitative in nature. The Supreme
Court of India in the case of Standard Vacuum Refinery Company Vs. their workmen
observed that contract labour should not be employed where: —

(a) The work is perennial and must go on from day to day;

(b) The work is incidental to and necessary for the work of the factory;
(c) The work is sufficient to employ considerable number of whole time
workmen; and
(d) The work is being done in most concerns through regular workmen.

The Contract Labour (Regulation & Abolition) Act 1970:-

In India, contract labourers are protected by the Contract Labour Regulation and Abolition
Act, 1970. A contract labourer is defined in the Act as one who is hired in connection with
the work of an establishment by a principal employer through a contractor. While a
contractor is the supplier of contract labour for the organization, a principal employer is the
person responsible for the control of the establishment. This act applies to any
establishment in which 20 or more workmen are employed on a contract basis on any day of
the last one year and also to all contractors who employ or have employed 20 or more
workmen on any day of the preceding twelve months. Every principal employer to whom
this act applies should register his establishment in the prescribed manner for employing
contract labour. Unlike the industry sector, generally, there is no provision for remaining
unregistered. If the Government at any point of time is dissatisfied with the practices
followed, it can revoke the registration of an establishment.

Constitutional Validity of the Act:-

The benefits conferred by the Act and the rules are in their nature, social welfare legislative
measures. There is a rational relation between the impugned Act and the objects to be
achieved, and the provisions are not in excess of those objects. There is no violation of
Article 14. The application of the Act does not amount to an unreasonable restriction on the

60
rights under Art 19(1)(g). Moreover, the Contract Labour (Regulation & Abolition) Act
1970 is not a complete code on contract labour. The Act serves two purposes that is-1)
regulations of conditions of service of workers employed by the contractor who is engaged
by a principal employer; and 2) the appropriate government abolishing contract labour
altogether in certain Central Government or by any appropriate government, provide that
upon the abolition of contract labour, the said labour would be directly absorbed by the
principal employer.

Regulation of Contract Labour:-

For regulation of contract labour an appropriate government by an order notified in the

Official Gazette may appoint persons being Gazetted officers of Government, as it thinks fit
to be licensing officers for the purposes of this Act that is for the purpose of the regulation
of contract labour.

The license given to the contractors includes in particular, conditions as to hours of work,
fixation of wages and other essential amenities in respect of contract labour as the
appropriate Government may deem fit to impose in accordance with the rules, if any, made
under Section 35 and shall be issued on payment of such fees and on deposit of such sum, if
any, as security for the due performance of the conditions as may be prescribed.

Section 16-21 deals with Welfare and Health of Contract Labour.

Section 18 of the Act speaks of facilities like supply of drinking water, conveniences of
latrines urinals and washing facilities.

First-aid facilities shall be provided and maintained by the contractor so as to be readily

accessible during all working hours a first-aid box equipped with the prescribed contents at
every place where contract labour is employed by him.

If any amenities mentioned in Section 16, 17, 18 and 19 for the benefit of contract labour
employed in an establishment is not provided by the contractor within the time prescribed
therefore, such amenity shall be provided by the principal employer within such time as
may be prescribed.

The governments’ failure to perform its obligation amounts to a violation of Article 21, and
the workers can enforce their right by a writ petition under Article 32.

Section 21 has nothing to do with the wage rates. The object and purpose of the said section
is to ensure that wages payable in law by a contractor to his workmen are paid. If the
contractor fails to pay his wages legally payable by him, then under this section, the
principal employer is under an obligation to pay the wages and get them reimbursed from
the contractor.

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 SHORT NOTES
QUESTION 1:- Gratuity.?
Answer 1:-
Gratuity is a monetary / loyalty benefit given by an organization to its employees at the time
of leaving the organization. As per the gratuity law, it is applicable for people who have
worked in the same organization for 5 or more years. While it is usually paid at the time of
retirement, it can also be paid before if certain conditions are met. This benefit is made
mandatory by Payment of Gratuity Act, 1972 in recognition of employee’s years of service
in the organization.

Gratuity applicability for organizations:

As per Payment of Gratuity Act, the scheme for the payment of gratuity is applicable for:

1. Factories,
2. mines,
3. oilfields,
4. plantations,
5. ports,
6. railway companies,
7. shops or other establishments.

In general, Gratuity is applicable to any organization which employs ten or more people or
has employed (10 or more people) at any given time in the preceding twelve months.

Gratuity eligibility in India

An employee is eligible to get gratuity under the following circumstances:

An employee retires after completing 5 years of continuous service with the same
organization.

If an employee resigns after 5 years of working with the same organization.

Temporary staffs, contract workers are also eligible for gratuity as long as they are
considered as employees in the company

If an employee is being transferred overseas on an assignment, then he / she is eligible for

gratuity.

An employee who passes away or suffers disability due to illness or an accident.

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Gratuity formula
In India, Gratuity calculation of gratuity is on the following formula: Gratuity = Last Drawn
Salary × 15/26 × No. of Years of Service

Example: Imagine that you worked with ABC company for a period of 15 years. Your last
drawn basic salary along with dearness allowance was Rs 30000. Hence, The amount of
gratuity = 15*30000*15 / 26 = Rs 2,59,615

Notes:

The ratio 15 / 26 represents 15 days out of 26 working days in a month i.e., An average of
30 days reduced by 4 Sundays is considered for calculation.

Last drawn salary = Basic Salary + Dearness Allowance i.e., Basic + DA. Here we do not
consider gross salary or net salary.

So, years of service are rounded down to the nearest full year. For e.g., If the employee has
a total service of 20 years, 10 months and 25 days, then you will receive the gratuity for 21
years.

If an employee has a total service of 20 years, 1 month and 25 days, no. of years will be 20
years.

The amount of gratuity cannot exceed Rs. 20 lakhs. If it exceeds that amount, it will come
under as ex-gratia.

Is Gratuity Taxable?
Yes. Gratuity is taxable but only if it exceeds an amount of Rs. 20 Lakh. The taxable
amount will be added to the total income under “others” category and tax will be calculated
on income tax slab.

For e.g., If a person gets the gratuity of Rs. 15,25,742, then this amount is not taxable.

If a person gets the gratuity of Rs. 25,25,742, then, exemption will only be for Rs. 20 and
Rs. 5,25,742 is taxable.

This ends our post. Also, if you have any doubts or queries kindly drop them in the
comment section below.

Few Significant Points about Gratuity:

Following are some of the most prominent points about payment of gratuity by an employer
to an employee.

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An employee can receive a gratuity amount higher than Rs.10,00,000 from his/her
employer, the exemption for tax in this case will be calculated as per the points listed above
under taxation.

In the recent Interim Budget of 2019, interim finance minister, Mr. Piyush Goyal
announced that the existing tax-free gratuity limit will be increased to Rs.30 lakh.

The employer has the right to reject payment of gratuity to an employee if he/she has been
asked to leave his/her job owing to any misconduct.

In case of death of the employee, the nominee or heir of the employee is paid the gratuity
amount. The taxation for this is calculated for the receiver under the head – income from
other sources.

Question 2:- Appropriate government.?

Answer 2:-

Anything which is on Land, and is situated only in one place, the appropriate government is
State Government.

( Eg:- a factory, a shop, a hospital, trust, which is placed in a single location)

Anything that sails over water or is situated underground, or flys in air or moves accross
places or is situated at several places in different states, the appropriate government is
Central Government. and would also include businesses directly related to it.

(Eg :- Shipping companies, Mines, Air Transport (passenger/ cargo), rail or road, or
banking institutions)

Section 2(a) in The Industrial Disputes Act, 1947

(a) " appropriate Government" means--

(i) in relation to any industrial dispute concerning any industry carried on by or under the
authority of the Central Government, or by a railway company or concerning any such
controlled industry as may be specified in this behalf by the Central Government or in
relation to an industrial dispute concerning

A Dock Labour Board established under section 5A of the Dock Workers (Regulation of
Employment) Act, 1948 (9 of 1940 ), or

The Industrial Finance Corporation of India established under section 3 of the Industrial
Finance Corporation Act, 1948 (15 of 1948 ), or

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The Employees' State Insurance Corporation established under section 3 of the Employees'
State Insurance Act, 1948 (34 of 1948 ), or

The Board of Trustees constituted under section 3A of the Coal Mines Provident Fund and
Miscellaneous Provisions Act, 1948 (46 of 1948 ), or

The Central Board of Trustees and the State Boards of Trustees constituted under section
5A and section 5B, respectively, of the Employees' Provident Fund and Miscellaneous
Provisions Act, 1952 (19 of 1952 ), or

The" Indian Airlines" and" Air India" Corporations established under section 3 of the Air
Corporations Act, 1953 (27 of 1953 ), or

The Life Insurance Corporation of India established under section 3 of the Life Insurance
Corporation Act, 1956 (31 of 1956 ), or

The Oil and Natural Gas Commission established under section 3 of the Oil and Natural
Gas Commission Act, 1959 (43 of 1959 ), or

The Deposit Insurance and Credit Guarantee Corporation established under section 3 of the
Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961 ), or

The Central Warehousing Corporation established under section 3 of the Warehousing

Corporations Act, 1962 (58 of 1962 ), or

The Unit Trust of India established under section 3 of the Unit Trust of India Act, 1963 (52
of 1963 ), or

The Food Corporation of India established under section 3, or a Board of Management

established for two or more contiguous States under section 16, of the Food Corporations
Act, 1964 (37 of 1964 ), or

The International Airports Authority of India constituted under section 3 of the International
Airports Authority of India Act, 1971 (48 of 1971 ), or

A Regional Rural Bank established under section 3 of the Regional Rural Banks Act, 1976
(21 of 1976 ), or

the Export Credit and Guarantee Corporation Limited or

the Industrial Reconstruction Bank of India, the National Housing Bank established under
section 3 of the National Housing Bank Act, 1987 (53 of 1987) or

A banking or an insurance company, a mine, an oil- field , a Cantonment Board, or a major

port, the Central Government, and

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(ii) in relation to any other industrial dispute, the State Government;

Question 3:- Fixation of minimum rates of wages.?

Answer 3:-

The government under the minimum wages act, 1948 has made it mandatory to provide the
workers working in a factory with minimum wages. Therefore the section 3 of this act states
the Fixation Of Minimum Rates Of Wages [Section 3(1) (A)]. This will help the employees
to get their hard-work paid appropriately.

Fixing the minimum rates of wages:

 For the time work, a minimum rate of wages will be given i.e. “a minimum time
rate.”
 For the piece of work, a minimum rate of wages will be given i.e. “a minimum piece
rate.”
 Employees employed for a piece of work are given a minimum rate of remuneration,
for securing their minimum rate of wages on time work basis.
 A substitute of minimum rate is given to the employees whether a piece or the time
rate, which would be otherwise given as the overtime done by the workers.

Also, a minimum rate of wages may be fixed for one or more of the following periods of
wages:

 The Hour
 The Day
 The Month, or
 The other large wage period as may be suggested

Therefore, the wages may be provided by calculating the number of hours the worker spent
in a factory. It can also be calculated by the number of days, months or the other suggested
wage period. Thus, the minimum wage fixation shall be done, for all the workers working
in a factory depending on the nature of calculation as per the number of hours, day, month,
etc.

Minimum Wages Act, 1948

Sec 3. Fixing of minimum rates of wages

Sec 3 (1) The appropriate government shall in the manner hereinafter provided –

66
(a) fix the minimum rates of wages payable to employees employed in an employment
specified in Part I or Part II of the Schedule and in an employment added to either Party by
notification under section 27 :

Provided that the appropriate government may in respect of employees employed in an

employment specified in Part II of the Schedule instead of fixing minimum rates of wages
under this clause for the whole State fix such rates for a part of the State or for any specified
class or classes of such employment in the whole State or part thereof;

(b) review at such intervals as it may think fit such intervals not exceeding five years the
minimum rates of wages so fixed and revise the minimum rates if necessary :

Provided that where for any reason the appropriate government has not reviewed the
minimum rates of wages fixed by it in respect of any scheduled employment within any
interval of five years nothing contained in this clause shall be deemed to prevent it from
reviewing the minimum rates after the expiry of the said period of five years and revising
them if necessary and until they are so revised the minimum rates in force immediately
before the expiry of the said period of five years shall continue in force.

Sec 3 (1A) Notwithstanding anything contained in sub-section (1) the appropriate

government may refrain from fixing minimum rates of wages in respect of any scheduled
employment in which there are in the whole State less than one thousand employees
engaged in such employment but if at any time the appropriate government comes to a
finding after such inquiry as it may make or cause to be made in this behalf that the number
of employees in any scheduled employment in respect of which it has refrained from fixing
minimum rates of wages has risen to one thousand or more it shall fix minimum rates of
wages payable to employees in such employment as soon as may be after such finding.

Sec 3 (2) The appropriate government may fix –

(a) a minimum rate of wages for time work (hereinafter referred to as "a minimum
time rate");

(b) a minimum rates of wages for piece work (hereinafter referred to as "a minimum
piece rate");

(c) a minimum rate of remuneration to apply in the case of employees employed on

piece work for the purpose of securing to such employees a minimum rate of wages
on a time work basis (hereinafter referred to as "a guaranteed time rate");

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 (d) a minimum rate (whether a time rate or a piece rate) to apply in substitution for
the minimum rate which would otherwise be applicable in respect of overtime work
done by employees (hereinafter referred to as "overtime rate").

Sec 3 (2A) Where in respect of an industrial dispute relating to the rates of wages payable
to any of the employees employed in a scheduled employment any proceeding is pending
before a Tribunal or National Tribunal under the Industrial Disputes Act 1947 (14 of 1947)
or before any like authority under any other law for the time being in force or an award
made by any Tribunal National Tribunal or such authority is in operation and a notification
fixing or revising the minimum rates of wages in respect of the scheduled employment is
issued during the pendency of such proceeding or the operation of the award then
notwithstanding anything contained in this Act the minimum rates of wages so fixed or so
revised shall not apply to those employees during the period in which the proceeding is
pending and the award made therein is in operation or as the case may be where the
notification is issued during the period of operation of an award during that period; and
where such proceeding or award relates to the rates of wages payable to all the employees
in the scheduled employment no minimum rates of wages shall be fixed or revised in
respect of that employment during the said period.

Sec 3 (3) In fixing or revising minimum rates of wages under this section –

(a) different minimum rates of wages may be fixed for –

(i) different scheduled employments;

(ii) different classes of work in the same scheduled employment;

(iii) adults adolescents children and apprentices;

(iv) different localities;

(b) minimum rates of wages may be fixed by any one or more of the following wage
periods; namely :

(i) by the hour

(ii) by the day

(iii) by the month or

(iv) by such other larger wage-period as may be prescribed

and where such rates are fixed by the day or by the month the manner of calculating wages
for a month or for a day as the case may be may be indicated :Provided that where any
wage-periods have been fixed under section 4 of the Payment of Wages Act 1936 (4 of
1936) minimum wages shall be fixed in accordance therewith.
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 LAW OF TAXATION

Question 1:- What are the different categories of assessees according to

their residential status.? How is it determined.?
Answer 1:-

Residential status is very important in Income Tax Act as the determination of tax liability
depends much on it.

An assessee is either
(a) resident in India; or
(b) non-resident in India.

However resident individual and HUF may be

(a) resident and ordinarily resident; or
(b) resident but not ordinarily resident.

All other assessess are either resident or non resident.

RESIDENTIAL STATUS OF AN INDIVIDUAL

A person who has never gone out of India is always a resident and ordinarily resident in
India.

Determining whether he/she is resident in India –

A person is said to be resident in India if he satisfies at least one of the following
conditions-

(i) he is in India for a period of 182 days or more in the year

(ii) he is in India for a period of 60 days or more during the year and 365 days or more
during the four years immediately preceding the previous year.

The aforesaid period of 60 days is extended to 182 days in case of an Indian citizen who
leaves India during the year for the purpose of employment outside India or an Indian
citizen who leaves India during the year as a member of the crew of an Indian ship. For this
purpose the requirement is leaving India for purposes of employment ( the employment
may be in India or may be outside India).

The aforesaid period of 60 days is extended to 182 days also if Indian citizen or a person of
Indian origin comes to a visit in India. A person is deemed to be of Indian origin if he, or
either of his parents or any of his grand parents, was born in undivided India.If a person
doesn’t satisfies any of the above two conditions then he is non resident.
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 Determining whether he/she is ordinarily resident or not ordinarily resident
A resident individual is treated as Resident and ordinarily resident in India if he satisfies
condition of resident as stated above and also satisfies both of the following conditions-

(i) he has been resident in India in at least 2 out of 10 years immediately preceding the
relevant year

(ii) he has been in India for a period of 730 days or more during 7 years immediately
preceding the relevant year.

The person who doesn’t satisfies both of the above conditions is a resident but not
ordinarily resident.

TAX PLANNING IN RESPECT OF RESIDENTIAL STATUS BY INDIVIDUAL

The income tax will be applicable or not on an income source depends on the residential
status of the assessee. The persons which are outside India for a major of time during the
year and preceding year can keep some points in mind so that if they are capable of adjust
their schedule they can save a lot of tax.

1. Individuals who are visiting India on a business trip or in some other connection should
not stay in India for more than 181 days in the year and no more than 364 days in
preceding four years to enjoy non-resident status.
2. If individual is in India for more than 364 days during the preceding four years then he
should avoid staying in India for more than 59 days in a year. If he wants to stay more
than 59 days then he may come in such manner that no more than 59 days come in a year
for eg he may come after 2nd feb and leave before 29 may. so that no more than 59 days
period is covered in both years.
3. Similarly Indian citizen or person of Indian origin should plan their trip such that no more
than 181 days will fall in one year.
4. A non resident should not receive any income directly in India even if the business is
controlled directly from India. He should first receive income outside India and then remit
it to India, by such way no tax is leviable on such income.
5. Similarly a non ordinarily resident should receive his income outside India which is
earned outside India and from a business controlled outside India.

RESIDENTIAL STATUS OF HUF

A Hindu Undivided Family (HUF) is said to be resident in India if the control and
management of its affairs are wholly or partly situated in India.

A resident HUF is treated as Resident and ordinarily resident in India if the Karta (inclusive
successive karta) satisfies satisfies both of the following conditions-

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(i) he has been resident in India in at least 2 out of 10 years immediately preceding the
relevant year

(ii) he has been in India for a period of 730 days or more during 7 years immediately
preceding the relevant year.

If karta doesn’t satisfies any of the above conditions then HUF is treated as Resident but not
ordinarily resident.

If HUF’s control and management is situated wholly outside India then it is treated as non
resident.

RESIDENTIAL STATUS OF A FIRM OR ASSOCIATION OF PERSONS (AOP)

A partnership firm or association of persons is said to be resident in India if then control
and management of its affairs wholly or partly situated within India during the relevant
previous year. It is however treated as non resident in India if the control and management
of its affairs are situated wholly outside India.

RESIDENTIAL STATUS OF COMPANY

An Indian company is always resident in India.

Residential status of foreign company from Assessment year 2016-17.

A foreign company will be resident in India if its place of effective management (POEM)
during the relevant previous year is in India. For this purpose, the place of effective
management means a place where key management and commercial decisions that are
necessary for the conduct of the business of an entity as a whole are in substance made. For
this purpose a set of guiding principles to be followed in determination of POEM may be
issued by the Board of the benefit of the taxpayers as well as tax administration.

Question 2:- Enumerate any 10 items which are exempt from charge of
income tax.?
Answer 2:-

The following are 17 important items of income, which are fully exempt from income tax
and which a resident individual Indian assessee can use with profit for the purpose of tax
planning.

1. Agricultural income

Under the provisions of Section 10(1) of the Income Tax Act, agricultural income is fully
exempt from income tax.

71
However, for individuals or HUFs when agricultural income is in excess of Rs 5,000, it is
aggregated with the total income for the purposes of computing tax on the total income in a
manner which results into "no" tax on agricultural income but an increased income tax on
the other income.

2. Receipts from Hindu Undivided Family (HUF)

Any sum received by an individual as a member of a Hindu Undivided Family, where the
said sum has been paid out of the income of the family, or, in the case of an impartible
estate, where such sum has been paid out of the income of the estate belonging to the
family, is completely exempt from income tax in the hands of an individual member of the
family under Section 10(2).

3. Share from a partnership firm

Under the provisions of Section 10(2A), in the case of a person being a partner of a firm
which is separately assessed as such, his share in the total income of the firm is completely
exempt from income tax since AY 1993-94.

For this purpose, the share of a partner in the total income of a firm separately assessed as
such would be an amount which bears to the total income of the firm the same share as the
amount of the share in the profits of the firm in accordance with the partnership deed bears
to such profits.

4. Allowance for foreign service

Any allowances or perquisites paid or allowed as such outside India by the Government to a
citizen of India, rendering service outside India, are completely exempt from tax under
Section 10(7). This provision can be taken advantage of by the citizens of India who are in
government service so that they can accumulate tax-free perquisites and allowances
received outside India.

5. Gratuities

Under the provisions of Section 10(10) of the IT Act, any death-cum-retirement gratuity of
a government servant is completely exempt from income tax. However, in respect of private
sector employees gratuity received on retirement or on becoming incapacitated or on
termination or any gratuity received by his widow, children or dependants on his death is
exempt subject to certain conditions.

The maximum amount of exemption is Rs. 3,50,000;. Of course, this is further subject to
certain other limits like the one half-month's salary for each year of completed service,
calculated on the basis of average salary for the 10 months immediately preceding the year

72
in which the gratuity is paid or 20 months' salary as calculated. Thus, the least of these
items is exempt from income tax under Section 10(10).

6. Commutation of pension

The entire amount of any payment in commutation of pension by a government servant or

any payment in commutation of pension from LIC pension fund is exempt from income tax
under Section 10(10A) of IT Act.

However, in respect of private sector employees, only the following amount of commuted
pension is exempt, namely: (a) Where the employee received any gratuity, the commuted
value of one-third of the pension which he is normally entitled to receive; and (b) In any
other case, the commuted value of half of such pension.

It may be noted here that the monthly pension receivable by a pensioner is liable to full
income tax like any other item of salary or income and no standard deduction is now
available in respect of pension received by a tax payer.

7. Leave salary of central government employees

Under Section 10(10AA) the maximum amount receivable by the employees of central
government as cash equivalent to the leave salary in respect of earned leave at their credit
upto 10 months' leave at the time of their retirement, whether on superannuation or
otherwise, would be Rs. 3,00,000.

8. Voluntary retirement or separation payment

Under the provisions of Section 10(10C), any amount received by an employee of a public
sector company or of any other company or of a local authority or a statutory authority or a
cooperative society or university or IIT or IIM at the time of his voluntary retirement (VR)
or voluntary separation in accordance with any scheme or schemes of VR as per Rule 2BA,
is completely exempt from tax. The maximum amount of money received at such VR which
is so exempt is Rs. 500,000.

9. Life insurance receipts

Under Section 10(10D), any sum received under a Life Insurance Policy (LIP), including
the sum allocated by way of bonus on such policy, other than u/s 80DDA or under a
Keyman Insurance Policy, or under an insurance policy issued on or after 1.4.2003 in
respect of which the premium payable for any of the years during the term of the policy
exceeds 20 per cent of the actual capital sum assured, is fully exempt from tax.

However, all moneys received on death of the insured are fully exempt from tax Thus,
generally moneys received from life insurance policies whether from the Life Insurance
Corporation or any other private insurance company would be exempt from income tax.
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10. Payment received from provident funds

Under the provisions of Sections 10(11), (12) and (13) any payment from a government or
recognised provident fund (PF) or approved superannuation fund, or PPF is exempt from
income tax.

11. Certain types of interest payment

There are certain types of interest payments which are fully exempt from income tax u/s 10
(15). These are described below:

(i) Income by way of interest, premium on redemption or other payment on such securities,
bonds, annuity certificates, savings certificates, other certificates issued by the Central
Government and deposits as the Central Government may, by notification in the Official
Gazette, specify in this behalf.
(iia) In the case of an individual or a Hindu Undivided Family, interest on such capital
investment bonds as the Central Government may, by notification in the Official Gazette,
specify in this behalf (i.e. 7 Capital Investment Bonds);
(iib) In the case of an individual or a Hindu Undivided Family, interest on such Relief
Bonds as the Central Government may, by notification in the Official Gazette, specify in
this behalf (i.e., 9 per cent or 8.5 per cent or 8 per cent or 7 per cent Relief Bonds); (iid)
Interest on NRI bonds;
(iiia) Interest on securities held by the issue department of the Central Bank of Ceylon
constituted under the Ceylon Monetary Law Act, 1949;
(iiib) Interest payable to any bank incorporated in a country outside India and authorised to
perform central banking functions in that country on any deposits made by it, with the
approval of the Reserve Bank of India or with any scheduled bank;
(iv) Certain interest payable by Government or a local authority on moneys borrowed by it,
including hedging charges on currency fluctuation (from the AY 2000-2001), etc.;
(v) Interest on Gold Deposit Bonds;
(vi) Interest on certain deposits are: Bhopal Gas victims;
(vii) Interest on bonds of local authorities as notified,
(viii) Interest on 6.5 per cent Savings Bonds [Exempt] issued by the RBI, and
(ix) Stipulated new tax free bonds to be notified from time to time.

12. Scholarship and awards, etc

Any kind of scholarship granted to meet the cost of education is exempt from tax under
Section 10(16). Similarly, certain awards and rewards, etc. are completely exempt from tax
under Section 10(17A), for example, Lakhotia Puraskar of Rs 100,000 awarded to the best
Rajasthani author, every year under Notification No. 199/28/95-IT (A-I) dated 22-4-1996.

74
Any daily allowance received by a Member of Parliament or by an MLA or any member of
any Committee of Parliament or State legislature is also exempt from tax under Section
10(17).

13. Gallantry awards, etc. -- Section 10(18)

The Finance Act, 1999 has, with effect from AY 2000-2001, provided for complete
exemption for the pension and family pension of Gallantry Award Winners like Paramvir
Chakra, Mahavir Chakra, and Vir Chakra and also other Gallantry Award winners notified
by the Central Government.

14. Dividends on shares and units -- Section 10(34) & (35)

With effect from the Assessment Year 2004-05, the dividend income and income of units of
mutual funds received by the assessee completely exempt from income tax.

15. Long-term capital gains of transfer of securities -- Section 10(38)

With effect from FY 2004-05, any income arising to a taxpayer on account of sale of long-
term capital asset being securities is completely outside the purview of tax liability
especially when the transaction has been subjected to Securities Transaction Tax (STT).

Thus, if the shares of any company listed in the stock exchange are sold after holding it for
a minimum period of one year then there will be no liability to payment of capital gains.
This provision would even apply for the old shares which are held by an assessee and are
sold after the Finance (No.2) Act, 2004 came into force.

16. Amount received by way of gift, etc -- Section 10(39)

As per the Finance (No. 2) Act, 2004, gift, etc. received after 1-9-2004 by an individual or
an HUF whether in cash or by way of credit, etc. is being subjected to tax if the same is not
received from a stipulated relative. Section 10(39) provides that the amount received to the
extent of Rs 50,000 will, however, be exempt from the purview of tax payment.

Similarly, amount received on the occasion of marriage from non-relatives, etc. would also
be exempted. It may be noted that the gift from relatives, as specified in the section can be
received without any upper limit.

17. Tax exemption regarding reverse mortgage scheme -- sections 2(47) and 47(x)

Any transfer of a capital asset in a transaction of reverse mortgage for senior citizens under
a scheme made and notified by the Central Government would not be regarded as a transfer
and therefore would not attract capital gains tax. The loan amount would also be exempt
from tax. These amendments by the Finance Bill, 2008 apply from FY 2007-08 onwards.

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Question 3:- What do you understand by expression SALARY.?
Answer 3:-
the definition of a salary is:

“A fixed compensation periodically paid to a person for regular work or services.”

A salary is a form of payment from an employer to an employee, which may be specified in

an employment contract. It is contrasted with piece wages, where each job, hour, or other
unit is paid separately, rather than on a periodic basis. From the point of view of running a
business, salary can also be viewed as the cost of acquiring and retaining human
resources for running operations, and is then termed personnel expense or salary expense.
In accounting, salaries are recorded on payroll accounts.

Salary is a fixed amount of money or compensation paid to an employee by an employer in

return for work performed. Salary is commonly paid in fixed intervals.

A salary is the regular payment by an employer to an employee for employment that is

expressed either monthly or annually, but is paid most commonly on a monthly
basis, especially to white collar workers, managers, directors and professionals.

A salary employee or salaried employee is paid a fixed amount of money each month. Their
earnings are typically supplemented with paid vacations and public holidays, healthcare
insurance in country’s without universal coverage, and other benefits.

Salaries are usually determined by comparing what other people in similar positions are
paid in the same region and industry. Most large employers have levels of pay rates and
salary ranges which are linked to hierarchy and time served.

In most countries, salaries are also affected by supply and demand – how many job
vacancies there are for a specific position in relation to the number of people that exist in
the area who could fill that post.

In India, salaries are generally paid on the last working day of the month (Government,
Public sector departments, Multi-national organisations as well as majority of other private
sector companies). According to the Payment of Wages Act, if a company has less than
1,000 Employees, salary is paid by the Company on 7th of every month. If a company has
more than 1,000 Employees, salary is paid by the 10th of every month.

Minimum wages in India are governed by the Minimum Wages Act, 1948. Employees in
India are notified of their salary being increased through a hard copy letter given to
them. Pay outstanding salary of police commissioner

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The terms salary and wages are commonly interchangeable, and in many contexts their
meanings are the same – but not always.

A salary does not change on a weekly or monthly basis. Salaries are calculated annually,
divided by twelve and paid out each month. In some countries people are paid double in
December, in such cases their annual salary is divided by thirteen, with two months’ pay
included in their December’s paycheck.

Wages, on the other hand, are calculated on the number of hours worked that week,
fortnight or month. Employers pay wages either weekly, fortnightly or monthly, and are
linked to how many hours the employee worked. This is not the case with salaries – a
salaried employee’s monthly income is always the same.

Managers, for example, are always paid a salary – never wages. Their monthly pay check
does not change if they do overtime. Production-line employees and other blue-collar
workers are usually paid overtime – their ‘wage’ varies according to how many hours they
put in that week or month.

Salary employees do not need to keep track of their hours in the way hourly workers do –
there is no need for them to sign a time sheet.

Workers on wages are typically paid time-and-one-half for every hour of overtime work. At
weekends and public holidays some employers may even pay double time.

Perhaps the main disadvantage of being paid a salary is that in most cases you are not able
to earn overtime. This means that you often have to work extra hours for no extra pay.

It is generally harder for salaried personnel to separate home from work life than for
workers on wages. Hourly employees typically find it easier to switch off completely from
work-mode as soon as their working day or shift ends.

The main advantage of receiving a salary is being able to plan ahead. You know exactly
how much each paycheck will be for – your medium-term future is predictable. This makes
it easier to decide how much you should borrow, what type of vacation you can afford for
next year, what type of car to buy and when and how to purchase it, etc.

Salary employees are more likely to receive benefits, which will include paid vacations, and
possibly a non-contributory pension scheme, health insurance, a company car, etc.

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Question 4:- What are the different types of allowances.? How are they
taxed.?
Answer 4:-

What is allowances

An allowance is a fixed amount of money received by a salaried employee from his

employer to meet a particular type of expenditure over and above salary. For example,
companies provide overtime allowance to employees if they work more than fixed working
hours. Similarly, there are many other allowances which are provided to salaried
individuals. Allowances are treated as part of the salary and are taxable, except for those for
which specific exemptions have been provided under various sections of Income Tax Act.

Based on their respective tax treatment, these allowances can be categorized into three
buckets -

1. Taxable,
2. non taxable
3. partially taxable.

TAXABLE ALLOWANCES IN INDIA

Taxable allowances are allowances that are treated as a part of salary and are not either fully
or partially exempted under any sections of Income Tax. Some of the popular allowances
that belong to this category are:

1. Entertainment Allowance

Entertainment allowance is the amount of money given to an employee to make payments

towards hospitality of their customers for drinks, meals, business outings, client meetings,
hotels and more. The allowance is completely taxable for all private sector employees.
However, government employees can claim exemption on this tax, as quoted under section
16 (ii) and the amount of exemption is limited to the lowest of following i) 20% of gross
salary (excluding all other allowance, perks and benefits), ii) Actual entertainment
allowance and iii) Rs. 5,000.

2. Overtime Allowance

This allowance is received by employees tend to work more than the operational hours
decided by the company. It can happen due to urgent assignments and firm project
deadlines. Any Overtime Allowance received by the employees is completely taxable.

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 3. Dearness Allowance (DA)

Dearness allowance is allowed to be paid to public sector employees and pensioners as a

cost of living adjustment to neutralize the impact of inflation and difference is cost of living
for employees living in different cities and towns.

4. Meal Allowance

Meal allowances are paid for meals/refreshments/tiffin services to their employees and are
completely taxable.

5. City Compensatory Allowance (CCA)

CCA is offered by companies to its employees compensate for a relatively high cost of
living in metropolitan cities. This allowance is used to incentivize and retain employees in
towns and cities where the cost of living is higher compared to employees working in other
locations.

6. Interim Allowance

Interim allowance is an allowance provided by the employer instead of final allowance.

Interim allowance is entirely taxable.

7. Cash Allowance

Cash allowance for expenditure like marriage allowance, holiday allowance and other
similar allowances provided by employer, it is fully taxable in the hands of employees.

8. Servant Allowance

Allowance provided for employees for hiring the services of servant, such allowance is
always taxable.

9. Project Allowance

If an employer provides allowance to employees to liquidate a project's expenses, then it

called project allowance and it is completely taxable.

10.Warden Allowance

If an employee pays tax to an employee who is working as a warden/keeper in any institute.

This allowance is considered as taxable.

11.Non-Practicing Allowance

When a doctor gets associated with clinics of various laboratories or medical institutes, any
non practicing allowance paid to them is taxable.

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NON-TAXABLE ALLOWANCES IN INDIA

Non taxable allowances are those allowances that are a part of an individual's salary which
are fully exempted from taxes. Here is the list of allowances that are totally non -taxable.

 Allowances Paid to Government Employees Abroad

When Indian government servants are paid while serving their employment tenure in other
countries, this allowance is considered as non taxable.

 Allowances Paid to UNO Employees

 Allowances that are paid to UNO Employees are completely non taxable.
 Allowances Paid to Judges of HC & SC
 Allowances that are paid to the judges of High Court and Supreme Court are
completely exempted from tax. These allowances are called as sumptuary
allowances.
 Compensatory Allowances

When Judges of High Court and Supreme Court receive any compensatory allowances,
these are exempted allowances in income tax.

PARTIALLY TAXABLE ALLOWANCES IN INDIA

Partially taxable allowances are those allowances which can be exempted from tax to a
certain limit, as per specified in the income tax rules & regulations. Some of the partially
taxable allowances are mentioned below.

 Conveyance Allowance Exemption Limit

This type of allowance is paid to employees for commuting to their work place from home
every day. If a conveyance allowance is less than Rs. 1,600, then it will be considered as
non-taxable. The allowance is exempted up to Rs. 1,600 only, any amount more than that
will be taxable as per income tax act.

 House Rent Allowance (HRA) Exemption Limit

House rent allowance is provided to the employees by a company to help them in coping up
with their accommodation expenses. But, if an individual doesn't lives in a rented space,
this allowance is fully taxable. Employees can claim deduction on house rent allowance
under section 10 (13A), if:

 Actual HRA received by an individual from employer

If the employee resides in metro cities like Delhi, Mumbai, Chennai or Bangalore, actual
rent paid should be as much as 50% of the basic salary
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  40% of basic salary for people living in non metros
 Excess of rent paid annually over 10% of annual salary
 Medical Allowance Exemption

This is an allowance paid by an employer when the employee or any of his family members
fall sick and requires prolonged medical treatment. However, if the medical expense
exceeds a certain amount (e.g. Rs. 15,000), then it becomes taxable.

 Special Allowance

A special allowance is paid to an employee for the performance of a duty, under section
14(i). This allowance does not fall within the category of a perquisite and is partially
taxable.

Difference between reimbursement and an allowance?

Allowance: Allowances are basically a part of an individual's salary package to cover the expenses that
may incur in the course of his employment. For instance, if a person uses his own vehicle to commute from
home to workplace, then the company will provide a transport allowance for the same. Similarly, there are
many other allowances endowed by the employers for the benefit of employees. Allowances are
categorized under three parts, taxable, non taxable and partially taxable allowances.

Reimbursement: A reimbursement is an expense which is made for an employee on the employer's behalf.
Reimbursements are always related to business expenses and do not add anything to an employee's income.
Thus, a reimbursement is not taxable at all.

Taxable, Non-Taxable and Partially Taxable Allowances AY 2017-

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Taxable Allowances Partially-Taxable Non-Taxable allowances
allowances

 Dearness allowance
 Entertainment allowance
 Overtime allowance
 City compensatory
allowance
 Interim allowance
 Project allowance
 Tiffin/meals allowance
 Uniform allowance
 Cash allowance
 Non-practicing allowance
 Warden allowance
 Servant allowance
 HRA except when it
qualified as exempt under
Section 10
 Fixed medical allowance
 Special allowance(including
children education
allowance, children hostel
allowances)
 Conveyance allowance
above Rs. 19,200 per annum
under section 10 (14) (ii) of
income tax act
 Entertainment allowance
– deduction of 1/5
of salary or Rs. 5,000
whichever is less under
section 16 (ii) of income tax
act
 HRA upto 40% of basic salary
(50% in case of employees
staying in 4 metros - Delhi,
Mumbai, Chennai and
Bangalore) subject to actual
rent paid being more than HRA
plus 10% of basic
 Conveyance allowance upto Rs.
1,600 per month or Rs. 19,200
per annum
 Payments to government
employees posted abroad
 Allowance for UN employees
 Sumptuary allowance paid to
judges of Supreme Court and
High Courts
 Compensatory allowance paid
to judges of Supreme Court and
High Courts

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Question 5:- Write a note on perquisite.? When taxable and not taxable.?

Answer 5:-

The term ‘salary’ for purposes of income tax is much wider in meaning than our regular
understanding. The term ‘salary’ as per the act will include

Monetary payments (Example: Basic salary, commission, bonus, allowances) and

Non-monetary facilities (Example: Housing accommodation, medical facility, interest-free

loans, etc.)

Such non – monetary additional facilities provided to employees are treated as perks the
taxability of which is dealt with by section 17(2) of the Income Tax Act.

PERQUISITE
The term ‘perquisite’ indicates some extra benefit in addition to the normal salary provided
to the employees. These may be provided free of cost or at concessional rates to the
employees.

Some examples of perquisites are rent-free accommodation, provision of a motor car for
personal use, use of health club, refreshment during office hours, etc.

The questions that arise from a tax point of view is

 Whether such perks are taxable?

 If yes, how do we value the benefit received?
 Whether there are any exemptions available?

Features of a Perquisite
 It may be provided in cash or in kind
 Reimbursement of expenses incurred during performance of official duty is not a
perquisite
 Perquisite can be made taxable only if it has a legal origin. An undue advantage taken
by the employee without the employer’s sanction cannot be considered as a perquisite

Categories of a Perquisite
The perquisites received by an employee from his employer can be classified into 2
categories based on taxability:

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Perquisite taxable in the case of all employees
 Rent free accommodation or accommodation at a concessional rate subject to certain
conditions
 Value of motor car provided for personal use subject to certain conditions
 Specified security or sweat equity shares allotted
 Provision of personal worker / attendant
 Gas, electricity or water supplied by the employer
 Reimbursement of medical expenditure over and above Rs. 15000 in a financial year
 Interest-free concessional loans provided (Except in the case where the loan is made
available for treatment of prescribed diseased, and the aggregate amount of loans are
exceeding Rs. 20,000 in total)
 Free / concessional education facilities provided to children of the employee only if
the value of such benefit per child exceeds Rs 1,000 per month
 Free / concessional food and non-alcoholic beverages over and above the amount of
Rs. 50 per meal provided
 Gift, token or voucher in lieu of such gift only if the value exceeds Rs. 5,000 in
aggregate during the year
 Travelling, touring and accommodation facilities provided or expenses reimbursed by
the employer
 Club Expenditure except in a case where the membership of health club, sports are
provided uniformly to all the employees
 Credit card expenses borne by the employer
 Use of movable assets other than laptops and computers
 Transfer of movable assets in the name of an employee based on certain conditions
Note: If the value of perquisites is below the monetary limits as prescribed in some of
the above cases, it would be treated as exempt.

Perquisite exempt in the case of all employees

 Telephone Facility
 Transport Facility
 Privilege passes and tickets
 Training provided to the employees
 Leave travel concession subject to certain conditions
 Medical facilities subject to certain prescribed limits
 Perquisites allowed by the Government for rendering services outside India

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Differences Between Allowances and Perquisites
Allowances are paid in cash as a fixed amount of sum on a monthly basis to meet certain
particular requirements for use in the course of the performance of duties. This amount may
or may not be borne by the employee for that specified purpose whereas. The amount of
allowances paid forms part of pay package of the employee whereas perquisites are
additional benefits in addition to the normal salary received by an employee. This may or
may not be provided in cash and the amount to be taxed depends on the value of the
benefits received. Perquisite may or may not form part of the pay package of the employee

Question 6:- What are permissible deductions from salary income.?

Answer 6:-

Salaried employees form the major chunk of the overall taxpayers in the country and the
contribution they make to the tax collection is quite significant. Income tax deductions offer
a gamut of opportunities for saving tax for the salaried class. With the help of these
deductions and exemptions and, one could reduce his/her tax substantially.

In this article, we try to list some of the major deductions and allowances, available to the
salaried persons, using which one can reduce their income tax liability.

 Exemption of House Rent Allowance

 Standard Deduction
 Leave Travel Allowance (LTA)
 Mobile reimbursement
 Books and periodicals
 Food coupons
 Section 80C, 80CCC and 80CCD(1)
 Medical Insurance Deduction (Section 80D)
 Interest on Home Loan (Section 80C and Section 24)
 Deduction for Loan for Higher Studies (Section 80E)
 Deduction for Donations (Section 80G)
 Deduction on Savings Account Interest (Section 80TTA)
 Additional Deduction for Interest on Home Loan (Section 80EE) (Section 80TTA)
 Income tax exemption on relocation allowance
 Tax treatment on Notice Pay and Joining Bonus
 Cab Facility transport provided by employer

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  Health club facility provided by employer
 Gifts or vouchers provided by employer
 Medical expenditure incurred outside India on employee

1. Exemption of House Rent Allowance

A salaried individual having a rented accommodation can get the benefit of HRA (House
Rent Allowance). This could be totally or partially exempted from income tax. However, if
you aren’t living in any rented accommodation and still continue to receive HRA, it will be
taxable.
If you couldn’t submit rent receipts to your employer as proof to claim HRA, you can still
claim the exemption while filing your income tax return. So, please keep rent receipts and
evidence of any payment made towards rent. You may claim the least of the following as
HRA exemption.
a. Total HRA received from your employer
b. Rent paid less 10% of (Basic salary +DA)
c. 40% of salary (Basic+DA) for non-metros and 50% of salary (Basic+DA) for metros
Read more about how to claim HRA exemption.

2. Standard Deduction
The Indian Finance Minister, while presenting the Union Budget 2018, announced a
standard deduction amounting to Rs. 40,000 for salaried employees. This was in the place
of the transport allowance (Rs. 19,200) and medical reimbursement (Rs. 15,000). As a
result, salaried people could avail an additional income tax exemption of Rs. 5,800 in FY
2018-19. The limit of Rs. 40,000 has been increased to Rs. 50,000 in the Interim Budget
2019.

3. Leave Travel Allowance (LTA)

The income tax law also provides for an LTA exemption to salaried employees, restricted to
travel expenses incurred during leaves by them. Please note that the exemption doesn’t
include costs incurred for the entire trip such as shopping, food expenses, entertainment and
leisure among others.
You can claim LTA twice in a block of four years. In case an individual doesn’t use this
exemption within a block, he/she could carry the same to the next block.
Below are the restrictions which are applicable to LTA:

 LTA only covers domestic travel and not the cost of international travel

 The mode of such travel must be either railway, air travel, or public transport

4. Mobile reimbursement
A taxpayer may incur expenses on mobile and telephone used at residence. The income tax
law allows an employee to claim a tax free reimbursement of expenses incurred. An
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employee can claim reimbursement of the actual bill amount paid or amount provided in the
salary package, whichever is lower.

5. Books and Periodicals

Employees incur expenses on books, newspapers, periodicals, journals and so on. The
income tax law allows an employee to claim a tax free reimbursement of the expenses
incurred. The reimbursement allowed to an employee is the lower of the bill amount or the
amount provided in the salary package.

6. Food coupons
Your employer may provide you with meal coupons such as sodexo. Such food coupons are
taxable as perquisite in the hands of the employee. However, such meal coupons are tax
exempt up to Rs 50 per meal. A calculation based on 22 working days and 2 meals a day
results in a monthly benefit of Rs 2,200 (22*100). Consequently, the yearly exemption
works up to Rs 26,400.
Read more about how to claim LTA

7. Section 80C, 80CCC and 80CCD(1)

Section 80C is the most extensively used option for saving income tax. Here, an individual
or a HUF (Hindu Undivided Families) who invests or spends on stipulated tax-saving
avenues can claim deduction up to Rs. 1.5 lakh for tax deduction. The Indian government
too supports a few as the tax saving instruments (PPF, NPS etc.) to encourage individuals to
save and invest towards retirement.
Expenditures/investment u/s 80C isn’t allowed as a deduction from income arising due to
capital gains. It means that if the income of an individual comprises of capital gains alone,
then Section 80C cannot be used for saving tax. Some of such investments are given below
which are eligible for an exemption under Section 80C, 80CCC and 80CCD(1) up to a
maximum of Rs 1.5 lakh.

 Life insurance premium

 Equity Linked Savings Scheme (ELSS)
 Employee Provident Fund (EPF)
 Annuity/ Pension Schemes
 Principal payment on home loans
 Tuition fees for children
 Contribution to PPF Account
 Sukanya Samriddhi Account
 NSC (National Saving Certificate)
 Fixed Deposit (Tax Savings)
 Post office time deposits
 National Pension Scheme

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8. Medical Insurance Deduction (Section 80D)
Section 80D is a deduction you can claim on medical expenses. One could save tax on
medical insurance premiums paid for the health of self, family and dependent parents. The
limit for Section 80D deduction is Rs 25,000 for premiums paid for self/family.
For premiums paid for senior citizen parents, you can claim deductions of up to Rs 50,000.
Additionally, health checkups to the extent of Rs 5,000 are also allowed and covered within
the overall limit.
Your employer may pay premium on your behalf and deduct it from your salaries. Such
premium paid is also eligible for deduction under section 80D.

9. Interest on Home Loan (Section 80C and Section 24)

Another key tax saving tool is the interest paid on home loans. Homeowners have the
option to claim up to Rs. 2 lakh as a deduction for interest on home loan for self-occupied
property. If the house property is let out, you can claim a deduction for the entire interest
pertaining to such a home loan.
Please note that from FY 2017-18, the loss from house property that can be set off against
other sources of income has been restricted to Rs. 2 lakh. In addition to the above, one can
also claim the principal component of the housing loan repayment as a deduction under 80C
up to a maximum limit of Rs 1.5 lakh.
Read more about deductions from house property

10. Deduction for Loan for Higher Studies (Section 80E)

Income Tax Act provides a deduction for interest on education loans. The significant
conditions attached to claiming such deduction are that the loan should have been taken
from a bank or a financial institution for pursuing higher studies (in India or abroad) by the
individual himself or his spouse or children.
One may begin claiming this deduction beginning from the year in which the loan starts
getting repaid and up to the next seven years (i.e. total of 8 assessment years) or before
repayment of the loan, whichever is earlier. Even a legal guardian could avail this income
tax deduction.
Read more about deductions from Section 80E

11. Deduction for Donations (Section 80G)

Section 80G of the Income Tax Act, 1961 offers income tax deduction to an assessee, who
makes donations to charitable organizations. This deduction varies based on the receiving
organisation, which implies that one may avail deduction of 50% or 100% of the amount
donated, with or without restriction.
Read more about Section 80G

12. Deduction on Savings Account Interest (Section 80TTA)

Section 80TTA of the Income Tax Act, 1961 offers a deduction of up to INR 10,000 on
income earned from savings account interest. This exemption is available for Individuals
and HUFs.

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In case the income from bank interest is less than INR 10,000, the whole amount will be
allowed as a deduction. However, in case the income from bank interest exceeds INR
10,000, the amount after that would be taxable.
Read more about deduction from Section 80TTA

13. Additional Deduction for Interest on Home Loan (Section 80EE)

Section 80EE allows homeowners to claim an additional deduction of Rs.50,000 (Section
24) for interest component of the home loan EMI.
Provided, the loan must not be for more than Rs 35,00,000 and the value of the property
must not be more than Rs 50,00,000. Furthermore, the individual must not have any other
property registered under his name at the time the loan is sanctioned.
Read more about deduction from Section 80EE

14. Income tax exemption on relocation allowance

Businesses, these days operate in multiple locations across the country. There are
possibilities that you are asked to shift to a different city for business reasons. Such a
relocation can cause expenses such as shifting to a new house, moving furniture, car
transportation cost, car registration charges, getting your kids admitted to a new school, and
more.
Fortunately, these expenses are to be borne by the employer. Sometimes, the employer
makes a direct payment for such expenses. Here is a summary of the tax liability of these
expenses.
Car transportation cost: An employee may incur expenses on transportation of the car to
the new place. The employer may reimburse the transportation expenses to the employee
against actual bills submitted by the employee. For example, expenses may be incurred on
movers and packers. Such expenses whether reimbursed to the employee or directly paid to
the transporters are exempt from tax for the employee.
Car registration charges: Most of the states within India charge car registration charges
for entry of the vehicle in their state. Certain conditions must be met for the car registration
charges to be exempt from taxes. That is, the car must be registered in the name of the
employee. The same car must be used to travel on transfer to be considered as part of
packaging and transportation cost. Upon meeting the above conditions, any expenses
reimbursed by the employer to the employee are exempt from tax for the
employee. Packaging charges: The expenditure on the packaging and moving of the
furniture, irrespective of reimbursement or direct payment by the employer, are exempt
from tax for the employee.
Accommodation: The employer may provide accommodation facilities for the initial 15
days once you relocate. Such expense will include boarding and lodging expenses including
any meals forming part of such expenses. The expenses reimbursed or met by the employer
will be exempt from tax for the employee.
Train/air tickets: The travelling expenses for the employee and his family from the current
place of residence to the place of new employment are exempt from tax.
Brokerage paid on rented house: If the employee has paid brokerage charges for finding a
house for rent, the expenses incurred are considered to be towards personal obligation of the

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employee. The reimbursed if any received by an employer is taxable as salary income of the
employee.
School admission fees: Though your employer reimburses the school admission fees for
your kids, this type of expense is considered to be a monetary benefit of the employee.
Therefore, the reimbursement is taxable as salary income of the employee.
Any expenses incurred beyond the period of 15 days will be taxable.

15. Tax treatment on Notice Pay and Joining Bonus

Some companies ask you to sign a bond or agreement stating you will serve the company
for a specified period of time. If you happen to leave the organisation before completing
this period, the organisation may recover the notice pay or the joining bonus paid to you
initially. The tax liabilities for these components are explained with illustrations below:
Notice Pay: Consider that Mr C, with a work experience of 1 year 6 months, was working
with Organisation A with an agreement of 2 years. The agreement stated that if he quits the
job within the agreement period, he must pay the salary of 3 months as notice pay.
Mr C wanted to quit the job and join the Organisation B. The new firm agreed to pay the
notice amount so that Mr C could join them sooner. Mr C wants a refund on TDS for the
notice pay as he has not received the salary from Organisation 1.
In this case, the former organisation must not include the notice pay under the ‘total salary
paid’ category in Form 16. This helps Mr C get a TDS refund on the notice pay. If the
organisation does not make necessary adjustments in Form 16, Mr C cannot get a refund.
Joining Bonus: Consider the case of Mr C. Say, he had received a joining bonus of
Rs.100,000 from Organisation 1 while joining. Since he has not completed the agreement
period, he must pay back the joining bonus while leaving the company. Let us consider that
he asks the new company to reimburse the joining bonus for him and the new organisation
does reimburse.
In this case, Mr C must check the Form 16 given by both the organisations. If Organisation
1 has also included the joining bonus in Form 16, then Mr C will not be able to obtain a
refund of the TDS from the income tax department. In this case, the TDS is a dead loss that
can neither be recovered or adjusted in ITR.

16. Cab facility transport provided by employer

Employers generally provide cab facility to and from the office and residence of the
employees. Such a facility is not taxed as a perquisite for the employee. The facility would
be an expense for the employer.
As per the Indian Income Tax Act, use of any vehicle provided by a company or an
employer for a journey by the employee from his residence to his office or another place of
work, shall not be regarded as a taxable perquisite, even if provided to him free of cost or at
a concessional rate.

17. Health club facility provided by employer

In the case of a health club facility provided by employer uniformly to all employees, the
facility is not taxable as a perquisite in the hands of the employee.

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18. Gifts or vouchers provided by employer
Gifts or vouchers given by an employer in cash or in kind are tax exempt up to Rs 5,000 per
year.

19. Medical expenditure incurred outside India on employee

In a case where the employer incurs expenditure on medical treatment outside India:
On the employee
Any member of the family of such employee
Travel and stay abroad of the employee or any member of the family in connection with
the medical treatment
Travel and stay abroad of one attendant who accompanies the patient in connection with
the medical treatment
‘Family’ means the spouse and children of the individual. Also the parents, brothers and
sisters of the individual or any of them, wholly or mainly dependent on the individual.
The above expenditure would be exempt from tax for the employee subject to the condition
that –
a. The expenditure on medical treatment and stay abroad shall be exempted only to the
extent permitted by the Reserve Bank of India; and
b. The expenditure on travel shall be excluded from perquisite only in the case of an
employee whose gross total income, as computed before including therein the said
expenditure, does not exceed two lakh rupees.

SHORT NOTES
Question 1:- Different forms of salary.?
Answer 1:-
‘Salary’ signifies remuneration or consideration given to a person for services rendered by
him to undertake a contract whether it is expressed or implied. Concept of salary is covered
under Section 15 to Section 17 of the Income Tax Act, 1961. This article covers the
different types of salaries in India which are taxable under the IT Act, 1961.

Types Of Salary
Basic pay and dearness allowance are charged to tax under Section 15 of the Act. Tax
treatments of other types of salary are as follows-

Advance Salary
Advance salary is taxable in the assessment year relevant to the previous year in which it is
received irrespective of incidence of tax in the hands of the employee.

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For instance, A’s salary is Rs. 60,000/ month. During the month of April 2016, he gets a
salary of 2 months in advance. In the assessment year 2015-16, 14 months’ salary will be
taxed and consequently, in the assessment year 2016-17, 10 months’ salary will be charged.
However, a person can claim an exemption under Section 89 of the said Act. A loan taken
from an employer is not taxable by virtue of Section 9(1) (iii) of the said Act.

Arrears Salary
It is another type of salary which is taxable on receipt basis if it has not been subjected to
tax earlier on due basis.

Suppose, if X gets Rs. 40,000 in the month of March 2015 as arrears of bonus pertaining to
PY 2013-14. It was not taxed during the PY 2013-14, then the amount of Rs. 40,000 would
be taxable as income of the PY 2014-15. A person’s salary can be exempted u/ Section 89
of the 1961 Act.

Leave Salary
As per the service rules, if a leave standing to credit account of the employee is not taken
within a year, it may lapse or may be enchased or may be accumulated. The accumulated
leaves can be availed by an employee during his service time or as per the service rule, such
leaves may be enchased at the time of retirement or leaving of job. Encashment of leave by
surrendering leave standing to his credit account is called ‘leave salary’.

If the leave encashment is received during the continuity of the employment, it is subject to
tax. However, relief can be claimed under Section 89 of the said Act.

If the leave is enchased at the time of retirement or superannuation, it is taxable under the
1961 Act subject to exemptions under Section 10 AA of the act.

In the case of a government employee, any amount received as an equivalent of leave salary
in respect of the period of earned leave at his credit at the time of his retirement is exempted
from tax.

Salary in lieu of notice period

It is a type of salary taxable under Section 15 of the Act.

Salary paid to partner

Salary paid to a partner in the appropriation of profits is covered under the head of ‘Profits
and Gains of business or profession’ and considered at the time of filing an income tax
return.

Fee or commission
‘Fee and commission’ are taxable as salary irrespective of the fact that they are paid in lieu
of salary or in addition to salary. Commission paid to the director for giving his guarantee
for repayment of loan etc. is covered under the head of ‘ Income from Other Sources’.
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Bonus

Bonus is taxable in the year of receipt if it has not been taxed on due basis. Assessee can
claim relief under Section 89 if the bonus is received in arrears.

Gratuity

It is a retirement benefit. Tax treatment of gratuity benefit of government and non-

government employee is discussed below

 A gratuity of a government employee is fully exempted under Section 10 (10)(i) of

the IT Act.
 A gratuity of a non- government employee covered by the Payment of Gratuity Act,
1972 is fully or partially exempted under Section 10 (10) (ii).
 Gratuity of a non- government employee not covered by the Payment of Gratuity
Act, 1972 is fully or partly exempted under Section 10 (10) (iii).
Pension
The tax treatment of pension in different cases is discussed below-

 Pension received by UNO by an employee or its family members is not chargeable to

tax.
 Family pension received by the family member of armed forces is also exempted.
 Family pension received after the death of the employee (not being a member of
armed forced) is covered under the head of ‘income from other taxable sources’ and
is taxable.
 Contribution of both employers and employees is deductible under Section 80
CCD(2) and Section80 CCD (1)
 Uncommuted pension received by a government or non- government employee is
taxable.
 Commuted pension of a government employee is fully exempted from tax under
Section 10 (10 A) (i).
 Commuted pension received by a non- government employee is fully or partly
exempted from tax under Section 10 (10 A) (ii).
(Commuted pension mean lump sum amount received and uncommuted pension is received
in instalment)

Salary From Unrecognised PF

Amount transferred from unrecognized provident fund to recognised provident fund is
taxable under the head of ‘Salaries’.

Retrenchment compensation
is calculated according to the provisions of Section 25 F of Industrial Disputes Act,1947. A
workman is entitled to retrenchment compensation equal to 15 days’ average pay for every

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completed year of service or any party thereon in excess of 6 months. Compensation in
excess of the said limit is taxable as salary.

Profit in lieu of salary Section 17(3)

Following incomes are treated as profit in lieu of salary-

Any compensation due or received in connection with the termination of the service
or modification of the service conditions.
 Any payment received from the present or former employer in appreciation for
services rendered (other than personal gifts).
 Refund from unrecognized Provident fund (Employers contribution and interest on
the same).
 Amount received under Keyman insurance of L.I.C.
Remuneration for extra duties
It is also one of the types of salary which is taxable under the Income Tax Act.

Voluntary payment to employees by an employer

This type of salary is also taxable when an employer voluntarily pays the employees.

Question 2:- Gratuity.?

Answer 2:-

Gratuity is a lump sum that a company pays when an employee leaves an organization, and
is one of the many retirement benefits offered by a company to an employee.

In India, gratuity rules and requirements are set out under the Payment of Gratuity Act,
1972. An employer may also choose to pay gratuity outside of that which is required by this
Act.

The Payment of Gratuity (Amendment) Act, 2018 enables the government to raise the limit
of tax-free gratuity. The change can be made through an executive order by the prime
minister.

On February 1, 2019, India’s interim budget hiked the tax-free gratuity limit from Rs 20
lakh (US$27,904) to Rs 30 lakh (US$41,856). The government had doubled the tax free
gratuity to Rs 20 lakh (US$27,904) in March, 2018.

In this article, we discuss India’s gratuity rules in terms of:

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  Applicability;
 Calculation;
 Tax exemption;
 Payment; and
 Forfeiture.

Applicability

The Payment of Gratuity Act, 1972 (the Gratuity Act) is applicable to employees engaged
in factories, mines, oilfields, plantations, ports, railway companies, shops or other
establishments with ten or more employees. The full official text of the Gratuity Act can be
found here. Gratuity is fully paid by the employer, and no part comes from an employee’s
salary.

To be eligible for gratuity under the Gratuity Act, an employee needs to have at least five
full years of service with the current employer, except in the event that an employee passes
away or is rendered disabled due to accident or illness, in which case gratuity must be paid.

Gratuity is paid when an employee:

 Is eligible for superannuation;

 Retires;
 Resigns; or
 Passes away or is rendered disabled due to accident or illness (if an employee passes
away, gratuity will be paid to the employee’s nominee).

Gratuity Calculation Formula

Gratuity in India is calculated using the formula:

Gratuity = Last Drawn Salary × 15/26 × No. of Years of Service

Notes:

 The ratio 15/26 represents 15 days out of 26 working days in a month.

 Last drawn salary = Basic Salary + Dearness Allowance.
 Years of Service are rounded down to the nearest full year. For example, if the
employee has a total service of 20 years, 10 months and 25 days, 21 years will be
factored into the calculation.

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Tax Exemption

Gratuity received under the Gratuity Act is exempt from taxation to the extent that it does
not exceed 15 days’ salary for every completed year of service calculated on the last drawn
salary (subject to a maximum of US$41,856 or Rs 30 lakh).

Any other gratuity is exempt to the extent that it does not exceed one half-month salary for
each year of completed service calculated on the basis of average salary for 10 immediately
preceding months. The upper limit of US$41,856 applies to the aggregate of gratuity
received from one or more employers in the same or different years.

India’s income tax department has put out a taxable gratuity calculator, which can be
accessed here.

Payment

The employer shall arrange to pay the amount of gratuity within 30 days from the date it
is billed to the person to whom the gratuity is allocated.

If the amount of gratuity payable under the section is not paid by the employer within the
period specified, he will have to pay simple interest on it from the date on which the
gratuity becomes payable at the rate not exceeding the rate stipulated by the federal
government.

Gratuity should be paid in cash, or if so desired by the payee, by demand draft or bank
check to the eligible employee, nominee, or legal heir.

Forfeiture

The gratuity payable to an employee shall be wholly forfeited if:

 The service of such employee has been terminated for his or her lawless or disorderly
conduct or any other act of violence on his or her part; or
 The service of such employee is terminated for any act which constitutes an offense
involving moral turpitude, provided that such offense is committed by him or her in
the course of his or her employment.

In order to forfeit gratuity of an employee, there must be a termination order containing

charges as established to the effect that the employee was guilty of any of the aforesaid
misconducts. In one case, it has been held that in the absence of a termination order
containing any of the above allegations, the gratuity of an employee cannot be forfeited.

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Question 3:- Profits in lieu of salary.?
Answer 3:-

Section 17(3) Of Income Tax Act

Profits in lieu of salary are payments received by an employee in lieu of or in addition to
salary or wages. Profits in lieu of salary is taxable under the Income Tax Act and must be
declared while filing income tax return.

Terminal Compensation
Any amount of compensation received by an employee from his employer or former
employer in connection with the termination of employment or modification of terms and
conditions of employment is regarded as profits in lieu of salary. An example of terminal
compensation could be retirement, premature termination, resignation or others.

Keyman Insurance Policy

Any payment received by an employee, under a keyman insurance policy including the sum
allocated by way of bonus on such policy, will be regarded as profits in lieu of salary.

Unrecognised Provident Fund or Unrecognised Superannuation Fund

Payment due ore received by an employee from an unrecognised provident fund or
unrecognised superannuation fund to the extent to which such payment does not consist of
contributions by the employee or interest on such employee’s contributions are profits in
lieu of salary. The accumulated balance of an unrecognised provident fund or unrecognised
superannuation fund, consists of the employee’s contribution plus interest thereon and the
employer’s contribution plus interest thereon.

Employers contribution and interest thereon and interest on the employee’s contribution are
not taxed during the period of employment. Hence, when the accumulated balance of such
a fund is paid to the employee either on retirement or on termination of service, the untaxed
portion is taxed as profits in lieu of salary. The interest on employees contribution would be
taxed as “Income from other sources”.

Amount Received Before or After Employment

Any amount received by an employee, whether in lump sum or otherwise before joining
any employment or after cessation of an employment is taxable as profits in lieu of salary.

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Any Other Payment from Employer
Any other payment made by an employer to an employee is taxable under the head profits
in lieu of salary. This is a comprehensive provision by virtue of which all payments made
by an employer to an employee whether made in pursuance of a legal obligation or
voluntarily are brought under the category of profits in lieu of salary.

Payments NOT Profits in Lieu of Salary

The following payments received by an employee will not be termed as profits in lieu of
salary to the extent they are exempt under Section 10:

 Death cum retirement gratuity

 Commuted value of pension
 Retrenchment compensation received by a workman
 Payment received from a statutory provident fund
 Payment received from recognised provident fund
 Any payment from an approved superannuation fund
 House rent allowance (HRA)

Question 4:- Annual Value.?

Answer 4:-

Annual value of property is the sum for which a property is reasonably expected to be let
from year to year. Hence, annual value of property is a notional rent which could have been
derived, had the property been let. Annual value of property plays an important role
in Income Tax return filing. In this article, we look at the procedure for calculating annual
value of property in detail.

The income from house property is added/ included in a person's (the assessee)' gross total
income only if it satisfies three essential conditions:
1. The assessee is the owner of that property.
2. The property must consist of house, buildings and/or land.
3. The property may be used for any purpose except used by the owner for the purpose of
running his business or profession.
Here ownership includes freehold, leasehold rights and also includes deemed ownership.

Section 27 of the Income Tax Act defines deemed ownership of the house property for the
purpose of levying tax as:
1. Transfer of ownership to a spouse or minor child
2. Holder of impartible estate. Impartible estate refers to the property which is not legally
divisible such as dividing a single storey house with say 3 rooms among 7 heirs.
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3. Property held by member of a co-operative society
4. Any person who has acquired a property under Power of Attorney transaction.

Deductions from house property before levying of tax

While computing the income earned from letting out the property, one can avail (where
eligible) various deductions available under section 24 of the Income Tax Act to arrive at
the net taxable income from house property income. These deductions include standard
deduction of 30 per cent, the deduction of municipal taxes and deduction of interest paid on
home loan which is allowed under this head.
Brokerage or commission paid to acquire an asset is not allowed as a deduction.

Interest paid on a home loan: Any Interest paid/payable on the loan taken for acquiring,
constructing, or repairing the property is allowed as a deduction from the income from that
house property.

Interest paid /payable in the previous years i.e. prior to the year in which property was
acquired or constructed (i.e. interest paid in pre-construction period) will be aggregated and
will be allowed as a deduction in five successive financial years starting from the year in
which acquisition/construction was completed.

Factors Determining Annual Value of Property

The following four factors play an important role in determining the annual value of a
property:

1- Actual Rent Received

Actual rent received or receivable is an important factor in determining the annual value of
property. The actual rent received could be dependent on various considerations. If the
owner of the property agrees to bear certain obligations like water or electricity bill, the rent
will be calculated by reducing the rent received by the amount spent by the owner on
meeting such obligatory expenses.

On the other hand, if certain obligatory expenses to be borne by the owner is met by the
tenant, then the rent will be computed by increasing the rent paid by the amount spent by
the tenant on meeting the obligations of the owner.

2- Municipal Value
Municipal value is determined by the municipal authorities for levying municipal taxes on
house property. Municipal authorities normally charge house tax/municipal taxes on the
basis of annual letting value of such house property, which is determined by it based upon
many considerations.

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3- Fair Rent
Fair rent is the rent which is a similar property can fetch in the same or similar locality if it
is let for a year. Fair rent can be easily ascertained for apartments based on prevailing
rentals.

4- Standard Rent
Standard rent is fixed under the Rent Control Act. If the standard rent has been fixed for
any property under the Rent Control Act, the owner cannot be expected to get a rent higher
than the standard rent fixed under the Rent Control Act. Therefore, standard rent could play
an important factor in determining annual value of property.

Procedure for Calculating Annual Value of Property

Based on the nature of property and utility, the annual value of property could fall into five
different categories as follows:

1. House property let throughout the previous year.

2. House property which is let and was vacant during the whole or any part of the
previous year.
3. House property which is part of the year let and part of the year self-occupied.
4. House property which is self-occupied for residential purposes or could not actually
be self-occupied owing to employment at any other place.
5. Annual value of house property held as a stock-in trade which was not let during the
whole of the previous year.

However, for the sake of simplicity, annual value of property in most cases can be
determined as the value after deduction of municipal taxes, if any paid by the owner.

Question 5:- Depreciation.?

Answer 5:-

Section 32 of Income Tax Act, 1961 (‘Act’) provides for depreciation.

Section 32(1) provides that depreciation in respect of

(i). buildings, machinery, plant or furniture, being tangible assets;

(ii). know-how, patents, copyrights, trade marks, licenses, franchises or any other business
or commercial rights of similar nature, being intangible assets acquired on or after the 1st
day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of
the business or profession, the following deductions shall be allowed
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(iii). in the case of assets of an undertaking engaged in generation or generation and
distribution of power, such percentage on the actual cost thereof to the assessee as may be
prescribed;
(iv). in the case of any block of assets, such percentage on the written down value thereof as
may be prescribed.

Depreciation is the diminution in the value of an asset due to normal wear and tear and due
to the passing of time or obsolescence. Normally, depreciation for financial statements is
calculated under the straight-line method or written down value method. However, for
income tax purposes, depreciation can be claimed in a different method than the normal
allowance for wear and tear. The higher depreciation rate allowed for income tax purposes
helps businesses reduce their tax liability while incentivising capital expenditure.

Type of Depreciation Allowed under Income Tax Act

The following types of depreciation allowance are allowed under the Income Tax Act in
India.

1. Normal depreciation for block of assets.

2. Additional depreciation in case of any eligible new machinery or plant (other than
ship and aircraft) which has been acquired and installed:
1. After 31.3.2005 by an assessee engaged in the business of manufacture or
production of any article or things or in the business of generation,
transmission or distribution of power.
2. After 31.3.2015 but before 1.4.2020 by an assessee engaged in the business of
manufacture or production of any article or things which is setup in a notified
backward area in the State of Andhra Pradesh or in the State of Bihar or in the
State of Telangana or in the State of West Bengal.
3. Normal asset-wise depreciation for an undertaking engaged in generation or
generation and distribution of power.

In case of normal depreciation for block of assets, depreciation is allowed on the basis of
written down value method. In case additional depreciation is allowed, depreciation at 20%
or 35% of the cost of the eligible plant and machinery acquired and installed in the previous
year is allowed in the first year in which asset is acquired and installed.

Conditions for Claiming Depreciation

The following conditions must be satisfied by the assessee for claiming depreciation
allowance under the Income Tax Act.

1. The asset must be owned by the assessee who claims the depreciation. However, the
asset could also be partially owned by the assessee to be eligible for depreciation.

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 2. The asset must have been used for the purpose of a business or profession carried on
by the assessee.
3. The asset should have been used during the relevant year in which depreciation
allowance is claimed.

Block of Assets
The following types of assets are eligible for depreciation and classified under blocks of
asset:

1. Buildings, machinery, plant and furniture – being tangible assets.

2. Know how, patents, copyrights, trademarks, licenses, franchises or any other business
or commercial rights of similar nature being intangible assets acquired on or after
1.4.1998.

Depreciation Rate for Various Asset Class under Income Tax

Assets eligible for depreciation can be classified into five different classes:

 Building
 Furniture
 Plant and Machinery
 Ships
 Intangible assets acquired on or after 1.4.1998

Intangible assets have a standard depreciation rate of 25%. All other types of assets have
different depreciation rates based on the class of asset.

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