Deferred employer payments remain taxable as profits in lieu of salary despite being subject to conditions.

Deferred payments made by a former employer in connection with cessation of service remained taxable as profits in lieu of salary, because their contingent or delayed character did not change their nature as an employment-related benefit. The inclusive definition of income under the Income-tax Act, 1961 was held wide enough to cover such cash receipts, and the absence of the words "whether convertible into money or not" in section 2(24)(iii) did not exclude them. The payments were therefore chargeable under section 17(3)(ii) read with sections 15, 17(1) and 2(24), and the appellate deletion was unsustainable.

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Issues: Whether the two deferred payments receivable by the assessee from his former employer on fulfilment of stipulated conditions were taxable as profits in lieu of salary and income, or were capital receipts outside the charging provisions.

Analysis: The payments in question were made by a former employer in connection with the cessation of service and were contingent only in the sense that they became payable on satisfaction of the stated conditions. The inclusive definition of income under section 2(24) of the Income-tax Act, 1961 covers the value of perquisites or profits in lieu of salary taxable under section 17(3), and the absence of the words "whether convertible into money or not" in section 2(24)(iii) did not exclude cash payments from its scope. The reasoning also rejected the contention that only receipts of income character could fall within section 17(3)(ii); a receipt does not cease to be income merely because some classes of income are exempt under section 10. The nature of the payment remained a benefit from the employer in connection with resignation, and the deferred conditions did not alter its character.

Conclusion: The two deferred payments were taxable as profits in lieu of salary under section 17(3)(ii) read with sections 15, 17(1) and 2(24) of the Income-tax Act, 1961, and the deletion made by the appellate authority was unsustainable.

Final Conclusion: The Revenue succeeded and the additions were restored in both assessment years.

Ratio Decidendi: A payment made by a former employer in connection with termination of employment, even if deferred and subject to conditions, is taxable as profits in lieu of salary where it falls within the inclusive scope of income under the Income-tax Act, 1961.

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