HC dismisses petition for law on imposing tax on high income agricultural earnings

The Delhi High Court dismissed a petition for taxing high-income agricultural earnings, stating it was impermissible to direct the government to enact such a law.

The Delhi High Court on Wednesday dismissed a petition seeking directions to the Delhi government for enacting a law to impose tax on high-income agricultural earnings, terming it “highly misconceived”.

The order was issued on a petition filed by Akaash Goel, who argued that the continued blanket exemption of agricultural income from taxation for Delhi residents has led to fiscal inequality and arbitrary classification among taxpayers. (HT Archive)

A bench of Chief Justice D. K. Upadhyaya and Justice Tejas Karia observed that directing the government to enact a particular law was impermissible.

“We can’t do all this. See your prayer. From the perusal of the prayer clause of the writ petition, it is apparent that the petitioner is asking us to issue a mandamus to the legislature to enact a particular law. Such a mandamus, in our opinion, is impermissible to be issued. The writ is highly misconceived and thereby dismissed,” the court said.

The order was issued on a petition filed by Akaash Goel, who argued that the continued blanket exemption of agricultural income from taxation for Delhi residents has led to fiscal inequality and arbitrary classification among taxpayers.

He contended that the continued inaction allows a narrow class of high-income individuals to remain outside the tax framework, while salaried professionals and traders continue to be fully taxed.

The plea further stated that under the constitutional scheme of taxation, the states are empowered to levy taxes on agricultural income, and that the Delhi government possesses the requisite legislative competence and authority to enact laws or frame policies relating to the taxation of agricultural income.

It added that many residents of Delhi, and other metropolitan regions, own agricultural land in neighbouring states such as Uttar Pradesh, Haryana, Punjab and Rajasthan, from which they earn considerable agricultural income. It argued that although these individuals are domiciled and economically active in Delhi, and avail themselves of the city’s urban facilities, infrastructure and benefits, they remain completely exempt from paying income tax on such earnings

“This creates an anomalous and inequitable situation where citizens residing in the same territory and enjoying similar standards of living are treated differently merely on account of the source of income,” the petition stated.