TMI Blog1999 (2) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... included in the total income of the assessee under section 10(10)(iii) of the Income-tax Act,' 1961, in his assessment for the assessment year 1977-78 ?" The assessee is an individual. He retired from Air India on August 1, 1968. At that time, the assessee availed of full exemption of Rs. 30,000 under section 10(10) as it then stood. In June, 1976, he retired from Rallis India Limited. In June, 1976, he received gratuity of Rs. 47,250. This time, the assessee claimed Rs. 23,333 as exempt under section 10(10)(iii). This was denied by the Assessing Officer vide order dated March 18, 1980. This order was passed under section 143(3) of the Income-tax Act. The assessee preferred an appeal against an order of the Assessing Officer, to the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lculated, whichever is less ;" A bare reading of the above section as it stood before the amendment by the Finance Act, 1974, shows that gratuity payable to the employees of the Government, local authority or a statutory corporation was totally exempted from payment of income-tax, Whereas any other gratuity not exceeding 15 days' salary for each year of completed service stood exempted subject to a maximum of twenty-four thousand rupees or fifteen months' salary, whichever is less. The Finance Act, 1974, was brought into force to remove anomalies in the above provision. Accordingly, after the Finance Act, 1974, section 10(10) read as follows during the relevant assessment year 1977-78 : "(10)(i) any death-cum-retirement gratuity receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that where any gratuities referred to in this clause are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this clause shall not exceed thirty thousand rupees ; Provided further that where any such gratuity or gratuities was or were received in any one or more earlier previous years also and the whole or any part of the amount of such gratuity or gratuities was not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this clause shall not exceed thirty thousand rupees as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by an employee from two or more employers in the same year whereas the second proviso deals with a case where an employee who has received gratuity in an earlier year from a former employer receives gratuity from another employer in a later year. In the case of the first proviso it is clear that the maximum amount of gratuity exempt from income-tax will not exceed Rs. 30,000 whereas in the case of the second proviso it is clear that the ceiling limit of Rs. 30,000 shall be reduced by the amount of gratuity which has been exempted in the earlier year(s). Therefore, the overall monetary ceiling limit of Rs. 30,000 will apply in relation to all other gratuities under section 10(10)(iii) whether received from the statutory corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply to all three sub-clauses of section 10(10). He further contended that the assessee, in the present case, availed of the full exemption of Rs. 30,000 in 1968 under section 10(10) as it then stood. He further contended that the Finance Act of 1974 came into force only with effect from April 1, 1975. He contended that since in 1968 section 10(10), as it then stood, gave full exemption to gratuity received from the statutory corporation, the Finance Act, 1974, which came into force on April 1, 1975, cannot be read retrospectively. He pointed out that when the gratuity was paid by Air India in 1968, the amount received by the employee from the statutory corporation stood fully exempted under the first part of section 10(10) whereas after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances, it is not possible to accept the contention advanced on behalf of the Revenue that the expression "this clause" in the second proviso should be read to apply to all the three sub-clauses. The question still remains as to whether under the second proviso gratuity received from Air India by the assessee in 1968 should be aggregated with the gratuity received from Rallis India Limited. As discussed hereinabove, prior to the Finance Act, 1974, gratuities received by the employees of the statutory corporations fell within the first part of the abovequoted old section 10(10) whereas under the Finance Act, 1974, such gratuities fall under the expression "any other gratuity" referred to in sub-clause (iii) of section 10(10). To repeat, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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