1982 (6) TMI 141

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....owing his salary at Rs. 16,120 and claimed an exemption on the entire amount of Rs. 63,000 received from the employer. For the gratuity of Rs. 30,000, his claim was that it was exempt under section 10(10) of the Income-tax Act, 1961 ("the Act"). For the ex gratia payment of Rs. 33,000, his claim was that it was received in appreciation of the long and loyal services rendered, and that it was a casual and non-recurring receipt and, hence, exempt under the Act. The ITO, on verification of the assessee's claim, found that two things made him disagree with the assessee's contention. One was that the letter of the employer, dated 18-5-1978, referred to above, stated that the gratuity for 36 years of service, at the rate of half of month's salary....

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....and loyal services rendered, he felt that this amount could be regarded as profit in lieu of salary. 4. It was against this decision of the AAC that the present appeal is directed. 5. After taking into consideration the relevant law on the subject, the facts found by the authorities below and the lack of evidence on crucial points, we are not inclined to agree with the contentions raised on behalf of the assessee. As rightly pointed out by the ITO, in his order, the letter given by the employer showed a desire, on its part, to help the assessee in avoiding payment of tax, earned on the excess gratuity amount, by adopting a simple expedient of treating the excess gratuity over Rs. 30,000 as ex gratia. This, thus, indicated that the entire ....

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.... whether it was compulsory on the part of the persons who paid it. Thus, it eventually turns down to a question of evidence, whether the assessee received the ex gratia payment as a gift for his personal qualities de hors his employment or received it even if voluntarily, for his long and loyal past services. If it is the former, it is exempt from taxation, but if it is the latter, it falls within the definition of section 17(3)(ii) which provides: "(ii) any payment other than any payment referred to in clause (10), clause (10A), clause (10B), clause (11), clause (12) or clause (13A) of section 10 due to or received by an assessee from an employer or a former employer or from a provident or other fund (not being an approved superannuation ....

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....of loyal services, then the past loyal services would become a qualification, entitling the assessee to receive the ex gratia payment. In that sense, it could be said that it is expected, calculated or at least anticipated and not the result of any chance. Apart from lack of evidence, we are unable to see any casualness in the receipt. It is for this reason, that we are unable to agree that this payment could be said to be the result of any chance or that it is casual. This appears to be a receipt which was not totally unforeseen and unanticipated. The expression "non-recurring" means that it does not repeat or occur more than once. "Non-recurring" also means that there was no claim, or right, of the assessee to expect its recurrence. For e....