TaxTMI 
TaxTMI 
1999 (2) TMI 60
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....a Limited. In June, 1976, he received gratuity of Rs. 47,250. This time, the assessee claimed Rs. 23,333 as exempt under section 10(10)(iii). This was denied by the Assessing Officer vide order dated March 18, 1980. This order was passed under section 143(3) of the Income-tax Act. The assessee preferred an appeal against an order of the Assessing Officer, to the Appellate Assistant Commissioner who vide his order dated December 10, 1980, confirmed the disallowance made by the Assessing Officer. Thereafter, the appeal came to be preferred to the Income-tax Appellate Tribunal. Vide order bearing No. ITA/353/Bom of 1981 the order passed by the authorities below came to be set aside. The Tribunal allowed the claim of the assessee for exemption under section 10(10)(iii) of Rs. 23,333. Consequently, the present reference has come before this court. At the outset, it may be mentioned that in this present case we are concerned with the provisions of section 10(10) as it stood during the assessment year 1977-78. In order to decide the above question, it would be relevant to quote section 10(10) of the Income-tax Act, 1961, as originally enacted. "(10) any death-cum-retirement gratu....
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....ent or on his becoming incapacitated prior to such retirement or on termination of his employment, or any gratuity received by his widow, children or dependents on his death, to the extent it does not, in either case, exceed one-half month's salary for each year of completed service, calculated on the basis of the average salary for the three years immediately preceding the year in which the gratuity is paid, subject to a maximum of thirty thousand rupees or twenty months' salary so calculated, whichever is less : Provided that where any gratuities referred to in this clause are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this clause shall not exceed thirty thousand rupees ; Provided further that where any such gratuity or gratuities was or were received in any one or more earlier previous years also and the whole or any part of the amount of such gratuity or gratuities was not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this clause shall not exceed thirty thousand rupees as reduced by the amount or, as the case may be, ....
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....th effect from April 1, 1975. In the light of the above discussion, the submissions made by learned counsel for the parties may be seen. Mr. Chatterjee, learned counsel appearing on behalf of the Department, contended that the total exemption that could be claimed in respect of the gratuity received from more than one employer was Rs. 30,000 and exemption to the extent of this amount had already been obtained by the assessee in the assessment year 1969-70 in respect of the gratuity received from Air India and consequently no more exemption could be claimed in respect of the gratuity received from Rallis India Limited. He contended that clause (10) of section 10, inter alia, consists of three sub-clauses. He Contended that the first proviso refers to gratuity in the second proviso which uses the expression "this clause". Accordingly, it was argued that the expression "this clause" in the second proviso would cover the entire clause (10) of section 10. Consequently, the gratuity of Rs. 30,000 received from Air India should be taken into consideration in working out the maximum amount of exemption under the second proviso and when that gratuity is taken into account, no more exe....
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....would defeat the scheme of the above section 10(10) of the Income-tax Act. In the circumstances, it is not possible to accept the contention advanced on behalf of the Revenue that the expression "this clause" in the second proviso should be read to apply to all the three sub-clauses. The question still remains as to whether under the second proviso gratuity received from Air India by the assessee in 1968 should be aggregated with the gratuity received from Rallis India Limited. As discussed hereinabove, prior to the Finance Act, 1974, gratuities received by the employees of the statutory corporations fell within the first part of the abovequoted old section 10(10) whereas under the Finance Act, 1974, such gratuities fall under the expression "any other gratuity" referred to in sub-clause (iii) of section 10(10). To repeat, the ceiling limits prescribed by each of the sub-clauses vary. The object of the amendment clearly was to remove anomalies in the old section 10(10) between the employees in the private sector and the employees in the statutory corporations. It is for this reason that the gratuities falling under the first part of the old section 10(10) stand removed and brought ....