TaxTMI 
TaxTMI 
1977 (8) TMI 88
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....public interest. It was further pointed out that the exemption was not subject to passing of any notification or declaration. The IT Officer did not accept the assessee's contentions. He set out the circumstances under which the reward was granted by the Central Government in para 2 of his order as under: "The Central Government (Ministry of Finance) sponsored a Voluntary Disclosure Scheme under the provisions of Voluntary Disclosure of Income and Wealth Ordinance, 1975. By this Ordinance, the Government offered an unique opportunity to the public at large that any person who wanted to disclose his black money or suppressed wealth etc., could come forward with a clear breast under certain conditions. Such undisclosed income or wealth would be assessed under a concessional rate without going into the details or the merits of the income or wealth. Besides this, the person was also immune from penalty or prosecution. The object was to bring out the suppressed black money in the country to bring down inflation in the market and also to give an opportunity to persons who were afraid to come forward to bring it out on account of high taxation attended with severe consequences. This sc....
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.... the income under the head "Salaries" and assessed as such. 2. The assessee went up in appeal before the AAC. The AAC allowed the appeal by observing as under:- "Rs. 1,680 was the reward authorised by the Central Government. The IT Officer disallowed it on two grounds: (1) That the payment was only a compensation for the work and (2) that it was not approved by the Central Government by a special notification. The first contention of the IT Officer is rejected as it is not stated to be additional remuneration but a reward. It is not bonus either. Secondly, as it is authorised by the Central Government, no approval is necessary by a notification that the same is in the public interest. Hence, the reward paid amounting to Rs. 1,680 is exempt under s. 10(17B). Aggrieved by this order of the AAC the Revenue has come on appeal before us. 3. The learned Deplt., Rep. Shri G.R. Raghavan vehemently contended that the AAC erred in holding that the sum of Rs. 1,680 received by the assessee represented only a reward and therefore it was exempt under s. 10(17B) of the IT Act, 1961. He further pointed out that the above payment of reward was not specifically notified or approve....
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....indicate that the question of approval by the Central Government for rewards to be in public interest applies only to payments of rewards by State Governments, that in regard to grant of rewards by the Central Government the exemption is automatic, that rewards given to any informants by the Central Government were being granted exemption under s. 10 (17B) of the Act, that the term "approved" has been used in Ss. 10(15) (iv) (b), (c), (d), & (e), 10 (17A) and 10 (18), that in those provisions the term "approved" is used with regard to the actions of others such as State Governments, that wherever the notification is required in respect of actions taken by the Central Government the expressions "notified" or "specified" by the Central Government are actually used-vide s. 10 (15) (i), (ii) and (iia) and that even if it is to be held that two interpretations of s. 10 (17B) are possible, it is well established that the interpretation which is favourable to the subject should be adopted. He further cited an instance of the requirement of approval of the reward of the State Government by the Central Government in the case of payment of pension to Tamil Nadu Anti Hindi agitators, which wa....
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....e under F.R. 56(k) during the period from 1st Oct., 1975 to 31st Dec., 1975 and (iv) who were on leave prepatory to retirement during any part of the aforesaid period. (4) The expenditure involved during the current financial year will be met out of the grant to which the pay and allowances of the officers/staff are debitable. (5) This sanction issues in exercise of the powers conferred on this Ministry." It is common ground that the above reward was announced by the Central Government voluntarily on 10th Jan., 1976 and that too after the successful completion of the voluntary disclosure scheme, which ended on 31st Dec., 1975. It is also common ground that none of the staff of the IT Department entertained any expectation of getting the reward. Now, this payment made by the Central Government is clearly and specifically referred to in the above letter as reward and the above letter further conveys sanction of the President of India to the payment of the above reward, which was equal to one month's basic to all the officers referred to in cls. (a) and (b) of the above letter. Further it is significant to note that the above reward was payable to all the officers and staf....
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....aid by the Central Government to the IT personnel. Now, the question is whether such a reward falls under s. 10(17B) of the IT Act, 1961. S. 10(17B) is in the following terms:- "10. Incomes not included in total income.-In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- (17B) 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." A plain reading the above provision indicates that in order to qualify for the exemption in respect of the payment of any cash or kind by the Central Government the following conditions should be satisfied : (i) Such payment must be made as a reward and (ii) Such payment must be made by the Central Government. The above section has also provided for exemption in respect of the payments made by a State Government. For getting exemption in such case the following conditions should be satisfied : (i) The payment should be made as a reward, (ii) such payment must be made by the State Government and (iii) s....