Termination compensation exemption depends on workman status; a company secretary-cum-chief executive was held outside section 10(10B).

Compensation for termination of employment is exempt under section 10(10B) only where it is retrenchment compensation received by a workman within the meaning of the Industrial Disputes Act, 1947. A company secretary and chief executive who was in charge of the company was not treated as a workman merely because some clerical work was also performed. The payment therefore fell within profits in lieu of salary under section 17(3) rather than the exemption provision, and the exemption under section 10(10B) was not available.

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Issues: Whether compensation received on termination of employment was exempt under section 10(10B) of the Income-tax Act, 1961, when the assessee was not a workman within the meaning of the Industrial Disputes Act, 1947.

Analysis: Section 10(10B) grants exemption only to compensation received by a workman on retrenchment, read with the meaning of "workman" in the Industrial Disputes Act, 1947, and the exemption is linked to compensation contemplated by that statutory regime. The assessee was found to be a company secretary and chief executive in charge of the company, and not a person governed by the Industrial Disputes Act merely because some clerical work was also performed. Compensation for termination of employment in such a case falls within the scope of profits in lieu of salary under section 17(3) rather than the exemption provision.

Conclusion: The exemption under section 10(10B) was not available, and the revenue's appeal succeeded.

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