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TMI Blog2008 (2) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... einafter referred to as "the Act"), inter alia, claiming the difference of gratuity amount on the ground that he joined the services of the Corporation on April 24, 1972, and he retired on October 14, 1997, and had completed 27 years 3 months' complete service and he was not paid the full gratuity. 3. Against the claim petition, the petitioner-Corporation filed the statement of objection, inter alia, stating that the amount deducted is towards income-tax and also for causing damage to the property of the Corporation. The controlling authority considering the rival contentions held that, the deceased workman is entitled for the difference of gratuity amount to the tune of Rs.1,16,870 and directed the Corporation to pay the same. The order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 17 of the Income-tax Act and submitted that "salary" is defined under the said provision, which includes gratuity amount also. By referring to sections 192 and 17 of the Income-tax Act, learned Assistant Solicitor General submitted that income-tax is deductible from the gratuity amount. However, exemption is given under section 10 of the Income-tax Act. He submitted that section 10 relates to incomes, which do not form part of the total income. He also referred to section 10 sub-section (10) clauses (i) to (iii) and submitted that, under these clauses, the exemption is given towards the payment of income-tax as against the gratuity amount. In so far as section 10 sub-section (10) clause (i) is concerned, he submitted that the emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 10 sub-section (10) deals with the exclusion of the gratuity amount from the total income. The relevant provision for the purpose of this case is, section 10 sub-section (10) clause (iii) of the Income-tax Act, which reads as under: "10.(10)(iii) any other gratuity received by an employee on his retirement or on his becoming incapacitated prior to such retirement or on termination of his employment, or any gratuity received by his widow, children or dependants on his death, to the extent it does not, in either case, exceed one-half month's salary for each year of completed service, calculated on the basis of the average salary for the ten months immediately preceding the month in which any such event occurs, subject to such limit as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporation that, it is only in respect of payment of gratuity under the Act and not under the Regulations, I find that such a contention is not tenable and is not in consonance with the provisions of the Income-tax Act. The Income-tax Act excludes the gratuity amount to the extent of limit prescribed under the Income-tax Act. Hence, the deduction of income-tax by the Corporation is per se contrary to the provisions of section 10 sub-section (10) clause (iii) of the Income-tax Act. There is no distinction between the gratuity paid under the Act or other wise. Accordingly, the contention that the gratuity amount is also liable for income-tax is rejected. 11. In so far as the damages is concerned, the record shows that the Corporation i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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