Ex gratia widow's pension not taxable where periodic payments lack legal obligation or contractual nexus.

Recurring voluntary payments made ex gratia by a foreign company to the widow of a deceased employee, without any legal obligation, contractual nexus, or services rendered by the recipient, were treated as a gratuitous allowance rather than taxable income. The court held that periodicity alone does not make a receipt income; it must arise from a real source capable of characterisation as income under the Act. As the payment was in the nature of a gift and not referable to an enforceable right in the widow, the annual allowance was not assessable to tax in her hands.

---

---

Issues: Whether annual payments made by a foreign company to the widow of its former employee, in recognition of the employee's past services and at the discretion of the company, constituted taxable income in the widow's hands.

Analysis: The payments were made after the employee's death, not under any agreement or legal obligation, and not as remuneration for services rendered by the widow. The allowance was granted voluntarily by the company as a recurring widow's pension, but the court found that the deceased employee's services had already been fully dealt with and that no nexus existed between those services and any enforceable right in the widow. A periodic receipt is not income merely because it is recurrent; it must still arise from a real source capable of being characterised as income under the Act. On the facts, the payment was gratuitous and in the nature of a gift, not assessable as income.

Conclusion: The annual allowance was not taxable as income in the hands of the assessee and the reference was answered against the Revenue.

Ratio Decidendi: A recurring voluntary payment made ex gratia to the widow of a deceased employee, without any legal obligation or contractual nexus and not referable to services rendered by the recipient, is not income chargeable to tax merely because it is periodic and arises from a perceived source of bounty.

---