TMI Blog1987 (9) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... : Upon such separation you will be eligible to receive the following : 1. The accumulations standing to your credit in the Company's Management Staff Provident Fund in accordance with the Rules. 2. Gratuity as applicable to the Management Staff of the Company. 3. A pension calculated on the basis of your pensionable salary at the time of cessation of service for each year of service up to the date of such cessation in accordance with the Rules (the pensionable salary being taken to be the average over the 36 months preceding such date of cessation). Since you are below the age of 48 years at the time of cessation of your service, benefit of commutation will not be available to you. 4. In addition to the above you will also received immediately on your ceasing to be in the employment of the Company a voluntary separation payment of Rs. 17,646. 5. You will, subject to the following conditions being complied with, receive two further payments of equal amounts on the following dates : (a) Rs. 17,646 on 2-4-1980, (b) Rs. 17,646 on 2-4-1981. The conditions, subject to which you will receive the aforesaid two payments, are as under : (i) You will have no claim, right, ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealed. The AAC set out the contentions of the assessee that the assessee became entitled to the payments only subject to certain conditions as stipulated in paragraph 5 of the Company's letter being fulfilled and these payments were, therefore, capital in nature. According to the assessee, the position regarding the payment in paragraph 4 which was taxed n the assessment year 1980-81 was different because that was the year of retirement. The AAC agreed with the assessee that the payments were capital in nature and he also referred to the decision of the Supreme Court in CIT v. Ciba of India Ltd. [1968] 69 ITR 692 and directed exclusion of the amount of Rs. 17,646 from each of the assessments now under consideration. 2. The Revenue is in appeal. The learned Departmental Representative submitted that the assessee received the amounts in question from a former employer. According to him, under the provisions of section 15 read with section 17(3), the amounts in question were clearly of the nature of salary. According to the provisions of section 15(a), he stated, salary due from a former employer whether paid or not was taxable and for the proposes of section 15, section 17(1) defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary", it followed that the payments which could be considered as "profits in lieu of salary" in terms of that provision could only be payments of revenue or income nature. In the present case, he submitted that the payment was capital in nature and could not be included. 4. We have considered the rival submissions. We proceed to dispose the case with reference to the provisions of law as applicable to the facts which we have set out. The assessee received in terms of para 4 of the letter Rs. 17,646 as voluntary separation payment. Para 5 did not give any nomenclature to the two further payments but the assessee was to receive two further annual payments on certain conditions being satisfied. These conditions admittedly were satisfied and the assessee did actually receive the two further amounts stipulated in paragraph 5 of Rs. 17,646. Section 2(24) defines income as under : "(24) 'income' includes-- (i) profits and gains; (ii) dividend; (iia) voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes, not being contributions made with a specific direction tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 2(24) (iii). For this contention, he placed reliance on the ratio of the decision of the Madras High Court in the case of CIT v. Manjushree Plantations Ltd. [1980] 125 ITR 150. We have carefully considered this contention. The Madras High Court referred to the earlier decision in the case of CIT v. G. Venkataraman [1978] 111 ITR 444 and stated that their Lordships had considered the provisions of section 2(6C)(iii) of the Indian Income-tax Act, 1922 which defined income as including 'the value of any benefit or perquisite, whether convertible into money or not, obtained from a company" and in that context the Court had held as under : "From this language it is clear that the 'benefit or perquisite' contemplated cannot be money itself. If it is money, the question of its value being taken into account or the benefit or perquisite being converted into money will not arise." In the present case, under the provisions of section 2(24)(iii), the words "whether convertible into money or not" are absent. Such an expression does arise in section 2(24)(iv). Therefore, section 2(24)(iii) is concerned with "the value of any perquisite or profit in lieu of salary taxable under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if exempted from income-tax, and a receipt which is not income does not become income just because, it is included as one of the items exempted from income-tax." The Madras High Court in the case of CIT v. Express Newspapers Ltd. [1980] 124 ITR 117 has stated as under :." 'Income is an ordinary word in the English language and unless the context otherwise requires, it should be given its ordinary natural meaning in a statute.' Thus, there are two principles to be borne in mind. though there is a definition of the word 'income' in s. 2(24), it is only inclusive and not exhaustive. It includes whatever is income construed in its natural or ordinary sense. There are also artificial categories added to that income. But barring those artificial categories, the natural concept would determine the quality of income." The aforesaid observations are authority for the proposition that merely because certain items figure in the various sub-sections of sec. 10 and the provisions of sec. 10 declare that such income shall not be included in the total income, if the receipts really are not income merely because they figure in sec. 10, they do not attain the characteristic of income. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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