Commuted pension value exempt, but terminal benefits paid for surrender of pension rights are taxable and relief eligible.

Only the lump sum equal to the commuted value of one third of pension paid as pension commutation under the Civil Pension Rules is excludible from total income under the income tax exemption provision. A terminal benefit paid for surrendering the right to the remaining pension does not amount to commutation and is includible in total income, subject to available tax relief mechanisms. The character of the payment, not merely its formula of calculation, determines exemption eligibility, and assessments should be revised where improper full exemption was allowed.

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