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TMI Blog2000 (10) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee during this year is to be assessed only under section 28(ii) of the Income-tax Act, 1961, and that thereby the assessee is entitled to the deduction under section 80S of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that where section 28(ii) applies, section 15/17(3)(i) of the Income-tax Act, 1961, will not apply even though the assessee is to be described as an employee ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that for the purpose of computing the exemption on account of gratuity under section 10(10), the word 'salary' in that section would include the commission earned by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; (b) Gratuity 25,000 (c) Commission 40,000 It is to be noted that the company's accounting year relevant to the said assessment year ended on December 31, 1967. For the aforesaid payments two resolutions dated August 27, 1967, and October 23, 1967, are relevant. They are as follows : "27-8-1967 : Resolved that on his retirement following the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " meant only the fixed periodical payment made to a person doing other than manual mechanical work and would not cover payments of commission made/determined with reference to the profits of the employer. He allowed Rs. 6,750 as exemption out of Rs. 25,000. So far as the sum of Rs. 40,000 received by the assessee is concerned, it was held that the amount would be covered by section 28(ii) and would qualify for relief under section 80S. Regarding payment of Rs. 95,000, it was held that the payment was mixed up with the services rendered by the assessee as an employee-director and not for the services rendered in his capacity as a person controlling the majority shares of the company, who managed its affairs through such shareholding. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was entitled to a deduction of Rs. 24,000 as against Rs. 6,750 allowed by the Income-tax Officer." The Revenue carried the matter in appeal before the Tribunal challenging the Appellate Assistant Commissioner's conclusions. The Tribunal upheld the conclusions. On being moved, a reference as aforesaid has been made. Learned counsel for the Revenue submitted that the Tribunal lost sight of the true import of section 17(3)(i) and section 28(ii) of the Act. Reliance was placed on a decision of this court in Ishwar Dass v. CIT [1980]123 ITR 379, to buttress the stand. There is no appearance on behalf of the assessee when the matter was called. Section 17(3)(i) and section 28(ii)(a), which are the pivotal provisions so far as the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n connection with the vesting in the Government, or in any corporation owned or controlled by the Government, under any law for the time being in force, of the management of any property or business ;" The Tribunal found that the materials on record showed that there were two groups involved in the substantial ownerships of the company. The assessee, who was the managing director, went out of the picture along with his group. The resolution dated October 23, 1967, clearly refers to the premature retirement of the assessee and the transfer of his shares while referring to the payment of Rs. 95,000. A finding was recorded by the Tribunal with reference to page 22 of the assessee's paper book, that the assessee and his group sold their shareh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ishwar Dass [1980] 123 ITR 379, helps the case of the assessee. In that case, the effect of section 28(ii)(a) was not considered because such a plea was raised for the first time before this court while the reference was being heard. Nevertheless, this court observed that there was force in the contention raised by the assessee about the applicability of section 28(ii)(a) of the Act. Not only that the court observed that, if law permits, the assessee may refer this claim under section 28 before any authority in accordance with law. While in civil actions, the expression "compensation" may have peculiar significance, the expression as used in the Act does not appear to be susceptible of only that meaning and no other. The primary signific ..... X X X X Extracts X X X X X X X X Extracts X X X X
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