1992 (11) TMI 63

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.... Income-tax Act, 1961, should be interpreted to mean an employee's total service under two different employers including the employer other than the one from whose service he retired for the purposes of the calculation of the period of years of his completed service, provided he was not paid gratuity by the former employer ?" The assessee is an individual and the relevant assessment year is 1974-75. The previous year is the financial year ending on March 31, 1974. During this financial year, the assessee retired from service from the firm of Messrs. Danfoss (India) Limited of which he was an employee for ten years. It is an accepted position that before joining Messrs. Danfoss (India) Limited, he was in the employment of another company,....

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.... be under one employer or more than one employer, but the aggregate amount cannot exceed the ceilings mentioned in the Act. The Commissioner applied for reference to this court and the Tribunal has accordingly referred the aforesaid question for opinion under section 256(1) of the Act. We have heard learned counsel for the Revenue, Mr. Jetley. Section 10 of the Act in its various clauses specifies the income which is not to be included in computing the total income of any person. Clause (10) thereof deals with gratuity. The relevant provision of section 10(10) applicable in the instant case is one contained in sub-clause (iii) thereof which, so far as relevant, as it stood at the relevant time, reads as follows : " (iii) any other gra....

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....tal income to the extent mentioned therein. The extent is that it should not exceed one-half month's salary for each year of completed service, calculated on the basis of average salary for the three years immediately preceding the year in which the gratuity is paid and that the maximum amount should not exceed Rs. 24,000 or 15 months' salary. The lower of the two is the ceiling. It is evident that this clause only restricts the gratuity exempt from tax to " one-half month's salary for each year of completed service ". It nowhere speaks of service with the same employer who pays the gratuity. Payment of gratuity by the employer depends upon the terms of employment or the relevant service rules. Where a person, who is already employed som....