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(2) In respect of income chargeable under sub-section (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act.”
12. Though, Section 4 of the Act is the charging Section, it is well known that rate or rates at which the income tax is to be charged is specified each year by enacting a Finance Act at the time of presentation of the annual Budget.
13. While Section 4 of the Act deals with the charge of income tax, the Parliament also has the power to levy surcharge on income tax. Power to levy a surcharge is contained in Article 271 of the Constitution of India which read as under:

21. This argument was rejected by the Court. The Bench took note of Article 271 of the Constitution along with Entry 82 of List 1 of the Seventh Schedule to the Constitution of India and Section 4 of the Act which is the charging section. It held that the power to levy surcharge on income tax is traceable to Article 271 read with Entry 82 and not to Section 4 of the Act. The rate at which the charge on total income on the previous year is imposed is not laid down in the Income Tax Act but in the Finance Act indicated every year by the Parliament to give effect to the financial proposals of the Central Government. It further held that since Income Tax Act deals with tax on income and nothing else, nor with charge should be a legal charge under Section 4, it must be a tax on the income of the assessee. Therefore, Section 4(1) of the Act was the charging section and the rate of tax is prescribed under that very Act i.e. Section 113. As long as the charge is on the “total income” of the previous year and so long as the rate relates to the subject matter of the tax, there is nothing to prevent the Parliament from fixing the date. What is to be seen is that the rate is applied to the “total income” and the tax which the assessee has to pay must be at the rate in respect of the total income of the previous year.