TaxTMI 
TaxTMI 
1995 (3) TMI 55
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....which he has entitled under law. This amount was assessed to tax under section 17(3)(ii) of the Income-tax Act by the Income-tax Officer, in the order of assessment dated December 16, 1982. Challenging the correctness of the said order of assessment, the assessee went in appeal before the Appellate Assistant Commissioner of Income-tax who, by his order dated April 30, 1984, allowed the appeal holding that the said amount was not taxable. Aggrieved by the said order of the appellate authority, the Revenue went in appeal before the Income-tax Appellate Tribunal. On March 30, 1985, the Tribunal set aside the order of the appellate authority and restored the order of the Income-tax Officer holding that the said amount was taxable as compensation for loss of employment under section 17(3)(i) of the Income-tax Act. On the application of the assessee under section 256(1) of the Income-tax Act, the Tribunal referred the aforementioned question for the opinion of this court. Mr. Y. Ratnakar, learned counsel for the assessee, vehemently contended that Rs. 10,500 were paid to the assessee as ex gratia ; he had no right to receive the same as it was over and above the terminal benefits to whi....
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....e modification of the terms and conditions relating thereto ; (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 fund), to the extent to which it does not consist of contributions by the assessee or interest on such contributions. " The amount of compensation due to an assessee-employee as a right under any statute, award or contract of employment or received by him from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions thereof irrespective of his entitlement to receive the same, is now included within the meaning of the expression " profits in lieu of salary " under clause (i) of sub-section (3) of section 17. This clause takes in its fold amounts paid by way of compensation in connection with the termination of the employment or the modification of the terms and conditions relating thereto. Having regard to the contents of the said letter of the em....
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....who received the money it accrued to him by virtue of his office or employment and that if it did, it did not matter whether it was voluntary or it was compulsory on the part of the person who paid it and that the amount would be taxable. In the second case, the question before the House of Lords was whether voluntary Easter offerings given as free gift to the vicar, a benefit as such, for his personal use were assessable to income-tax as profit accruing to him by reason of his office. Lord Loreburn, the Lord Chancellor, observed that where a sum of money was given to an incumbent substantially in respect of his services as incumbent, it accrued to him by reason of his office and that had it been a gift of an exceptional kind, such as a testimonial, or a contribution for a specific purpose as to provide a holiday, or a subscription peculiarly due to the personal qualities of the particular clergyman, it might not have been a voluntary payment for services, but as a mere present. These two cases were considered by the House of Lords in Reed v. Seymour [1927] 11 TC 625. In that case, Seymour was a cricket player. He was in the employment, of a cricket club at a specified salary. A be....
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.... Chief Dewan of the native State of Bhavnagar. The Maharaja of that State granted a monthly pension of Rs. 2,000 to the assessee. After the Maharaja ceased to be the ruler of the State on the merger of the State with Saurashtra, by his order a sum of Rs. 5 lakhs was paid to the assessee for his loyal and meritorious service. The Maharaja later confirmed by a letter that the amount was a gift as a token of his affection and regard for the assessee and his family. On the question of the assessability of that amount to income-tax, the assessee claimed that it was a personal gift and was not taxable but the Income-tax Officer rejected that contention and taxed that amount. On appeal, the Appellate Assistant Commissioner confirmed the order of assessment and dismissed the appeal. The same result followed when the assessee carried the matter in second appeal to the Income-tax Appellate Tribunal. He then sought reference of this question to the High Court of Bombay. The High Court affirmed the view of the Tribunal by answering the question in the affirmative and in favour of the Revenue. In appeal by the assessee to the Supreme Court, after considering the abovementioned cases, it was hel....