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Issues: (i) Whether standard deduction under section 16(1) of the Income-tax Act, 1961 is admissible against income from pension; (ii) Whether one Bench of the Income-tax Appellate Tribunal is required to follow the decision of another Bench on a similar point.
Issue (i): Whether standard deduction under section 16(1) of the Income-tax Act, 1961 is admissible against income from pension.
Analysis: Section 17(1)(ii) of the Income-tax Act, 1961 includes pension within the concept of salary. On that construction, the income received as pension falls within the statutory scheme governing salary income, and the deduction provided by section 16(1) is available against such pension income.
Conclusion: The issue was answered in the affirmative and in favour of the assessee.
Issue (ii): Whether one Bench of the Income-tax Appellate Tribunal is required to follow the decision of another Bench on a similar point.
Analysis: A prior decision of another Bench is not stated to be strictly binding, but it ought to be noticed and considered as a matter of prudence when the same point arises.
Conclusion: The Tribunal should ordinarily take notice of and consider the decision of another Bench on the same question, though it is not entirely binding.
Final Conclusion: The reference was answered in favour of the assessee, holding that standard deduction is allowable against pension income.
Ratio Decidendi: Pension is treated as salary for the purpose of section 16(1) of the Income-tax Act, 1961, and the corresponding standard deduction is therefore allowable.
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