TaxTMI 
TaxTMI 
1931 (12) TMI 15
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....ily retired. His retiring age was 55 and he would have reached that age in 1927. He was thus compulsorily retired from service four years before he should have been. He and the others similarly compulsorily retired presented memorials to the Government of India and the Secretary of State for India setting forth their grievances and this resulted in the issue of the following order by the latter which was published by the Government of Madras on 8th March 1930, viz., that the assessee should receive as compensation; (1) a lump sum equivalent to two-thirds of the difference between the amount received by him in pension from the date on which he was discharged to the date of attaining 55 years of age and the amount he would have received in pa....
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....s under the latter Act, every profit, income or gain is taxable that is not excluded. On an examination of two sections of the Indian Income-tax Act., this is made clear. Section 4(1) says: Save as hereinafter provided, this Act shall apply to all income, profits or gains, as described or comprised in Section 6, from whatever source derived, accruing or arising or received in British India, or deemed under the provisions of this Act to accrue, or arise, or to be received in British India. 4. Section 6 deals with the heads of income chargeable to income-tax and reads: Save as otherwise provided by this Act, the following heads of income, profits and gains, shall be chargeable to income-tax i....
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....rson who receives it to show that it is exempt from payment of income-tax. That he can do only by bringing himself within the provisions of Section 4(3) of the Act. 7. A case very nearly in point is In re Turner Morrison & Co. Ltd. A.I.R. 1929 Cal. 212. There a large sum of money had been paid to Messrs. Turner Morrison & Co., as compensation for their sudden dismissal because without notice to them in the middle of the year one of their managing agencies was brought to a close. Rankin, C.J., in his judgment points out the distinction between the English cases and the Indian Act dealing with the taxability of lump sum payments made to persons and says: They (the English cases) go upon the question whether a c....
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.... says: There is no doubt upon the Indian Act that the payment in the present case is income within the meaning of Section 12 unless it is saved by Section 4(3)(vii). 10. In the case before us of course the money received by the assessee would not fall to be taxed as a profit or gain derived from a business since the assessee was not carrying on a business but had been in receipt of a salary in respect of his Government service; and if it is not taxable Under Section 6, then it may be taxable Under Section 10. In my view, it is taxable under the former. 11. Another contention put forward here was that different considerations should apply when payment is made before the termination of a perso....
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.... would have earned had he not been so retired was taken and because he did not actually perform services under Government a third was deducted from the amount so arrived at. It seems to me to be perfectly clear that the assessee was treated as if he had remained in Government service and was being remunerated for his service. If this is so, it is perfectly obvious that the amount paid was taxable, as salary Under Section 6. This case cannot be brought within the provisions of Section 4(3)(v) as capital received in commutation of the whole or a portion of the pension or as being in the nature of consolidated compensation for death or injuries, It is argued that this was compensation for injuries and that that clause refers not....