TaxTMI 
TaxTMI 
TaxTMI 
1961 (1) TMI 90
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.... thus got became due on the employee's retirement, or on completion of the age of 55, and would not under clause 15 of the deed be payable, if the employee left service earlier, or be dismissed in the meanwhile, or died. Were the employment to end because of any of the three events stated above, the sums paid by the employee as the premiums were to be refunded to him or his legal representative. Under another provision of the arrangement, should the discontinuance be as the result of ill-health or unsuitability, the society in its discretion could pay a proportion out of the society's contribution to the employee or his legal representative. The arrangement also provided that were the retiring employee to elect not to take the annuity, it would be open to him to surrender the right and to get back the amounts paid by him and by the society in this behalf with interest. In all the cases, the trustee collected the money, the employer-society being constituted the trustee under the terms of the deed which, in its turn, paid the premia to the insurer and received later from the insurer. In the assessment year 1956-57 the society hadeoiitfibuted the following sums for the follo....
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.... learned advocate for the assessees, it would be of advantage to give extracts from the trust deed, as well as summarise the important parts of the rules, under which the contributions have been made. Trust Deed "Paragraph 2. The society hereby declares that it will pay the proportion of the premiums payable by the society under the rules of the scheme and will observe and perform its obligations under the scheme." "Paragraph 3. The trustees shall as agents for and on behalf of the society and the members of the scheme respectively effect or cause to be effected such policy or policies as may be necessary to carry out the scheme and shall collect and arrange for payment of the moneys payable under such policy or policies and shall hold such moneys as trustees for and on behalf of the person or persons entitled thereto under the rules of the scheme." Paragraph 6 of the rules says that the annual pension payable in respect of a member shall be the amount calculated in accordance with Table A in the Appendix thereto, having regard to the age of such member at the date he became a member of the scheme. Paragraph 7 provides that the pension shall be provided by....
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.... premiums paid by the society which is payable to the member or his legal personal representatives. Under 10 years … … None. Over 10 years but under 15 years One-quarter. " 15 " " 20 " One-half. " 20 " " 25 " Three-quarter. " 25 " " … " The whole. Therefore it is clear that the society's contributions under rule 6 vest in trustee and the employee gets the full benefit of such contributions only on the retirement at the age of 55, or part benefits on completing ten years of service and on the employment being terminated due to ill-health. It is further clear that the employees during the first ten years of their employment are not entitled to any benefit though the contribution has been made by the employer, and in the contingencies of their being dismissed for default they become entitled only to their shares of the contributions, which they made under the scheme. The short argument by the learned advocate for the employees is that such a contingent benefit in the society's contributions is not taxable, and section 7(1) is attracted only where the employees get veste....
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....e to them in the years 1922 to 1927. The income-tax authorities assessed the respondent with tax for 1927-28 on the amount of the current market value of the shares at the date of transfer, which order was appealed against. The ground taken was that notwithstanding the liability to forfeiture in certain events, immediately a sum was paid by the company to the trustees of the fund, the respondent became invested with a beneficial interest in the payment, which formed part of the emoluments for the year in which it was made, and such a payment would be liable to tax only in the year of the payment and not when the assessee got the amount. The learned judges rejected the argument holding that as the respondent did not obtain a vested interest in the yearly payments made to the trustees on the dates when they were respectively made they would not constitute additional remuneration of the year in which they were paid, and would only be such when the assessee got the shares. In this connection Lord Hanworth M.R. observes as follows: "Are those sums appropriated year by year? Are they sums which are paid by way of additional salary and which, although they cannot be immediately enj....
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....le under section 7(1). The proposition which the learned Government pleader has urged is that the employer's transferring money into the account of the employee and converting his position into that of a trustee for a certain purpose, should attract the liability to tax under section 7(1), even though the employer had not surrendered his rights in the amounts. He has argued that with parting of the control in the amounts the employees would become vested with some rights though enjoyment of the benefit would be postponed, and such postponement would not delay the liability to pay the tax. We think the case relied on by the learned Government pleader in support of his arguments only holds that delayed enjoyment of full right would not postpone the liability to pay the tax and is explainable on the ground of the right in the case having become vested with the result of the liability to pay the tax having arisen, though part enjoyment of the salary has been circumscribed by the scheme. The case is Smith v. Stretton [1904] Tax Cas. 36 [KB], where the taxpayer was an assistant master at Dulwich College, and was assessed to tax on a sum, which included £ 35 that was placed to ....