1977 (8) TMI 88 - AT - Income Tax

Tax Tribunal: Rs. 1,680 Reward Exempt under Section 10(17B)

The Tribunal held that the reward of Rs. 1,680 received by the assessee from the Central Government qualified for exemption under Section 10(17B) of the ... - Issues Involved:1. Whether the reward of Rs. 1,680 received by the assessee qualifies for exemption under Section 10(17B) of the Income Tax Act, 1961.2. Whether the reward was a compensation for work or an exempt reward.3. Whether the reward required specific approval or notification by the Central Government for exemption under Section 10(17B).Detailed Analysis:1. Whether the reward of Rs. 1,680 received by the assessee qualifies for exemption under Section 10(17B) of the Income Tax Act, 1961:The assessee received a reward of Rs. 1,680 from the Central Government and claimed it as an exemption under Section 10(17B) of the Income Tax Act, 1961. The Income Tax Officer (ITO) denied the exemption, arguing that the Central Government had not approved the reward as an exempt item in relation to public interest. The Appellate Assistant Commissioner (AAC) allowed the appeal, stating that the reward was authorized by the Central Government and did not require further approval. The Tribunal upheld the AAC's decision, emphasizing that the reward was granted by the Central Government for meritorious work related to the Voluntary Disclosure Scheme, and thus, qualified for exemption under Section 10(17B).2. Whether the reward was a compensation for work or an exempt reward:The ITO argued that the reward was essentially a compensation for the extra work done by the staff during the Voluntary Disclosure Scheme and not a reward in the true sense. The AAC rejected this contention, clarifying that the payment was not additional remuneration or bonus but a reward. The Tribunal agreed, noting that the reward was granted to all eligible Income Tax personnel, including those on leave, indicating it was not directly tied to the amount of work done by individual employees. The Tribunal concluded that the payment was indeed a reward for the collective effort of the IT personnel and not compensation for specific services rendered.3. Whether the reward required specific approval or notification by the Central Government for exemption under Section 10(17B):The ITO and the Departmental Representative argued that the reward needed specific approval or notification by the Central Government to qualify for exemption under Section 10(17B). The Tribunal analyzed Section 10(17B), which exempts 'any payment made, whether in cash or in kind, as a reward by the Central Government or any State Government for such purposes as may be approved by the Central Government in this behalf in the public interest.' The Tribunal interpreted that the requirement for Central Government approval applied only to rewards given by State Governments. Since the Central Government itself granted the reward, the Tribunal held that no further approval was necessary. The Tribunal also noted that the letter from the Ministry of Finance sanctioning the reward implicitly indicated that it was in public interest. Even if approval was required, the Tribunal considered the letter as sufficient evidence of such approval. Therefore, the reward met the conditions for exemption under Section 10(17B).Conclusion:The Tribunal concluded that the reward of Rs. 1,680 received by the assessee was exempt under Section 10(17B) of the Income Tax Act, 1961. The appeal by the Revenue was dismissed, and the order of the AAC allowing the exemption was upheld.