P. SUNDERESWARAN v. INCOME TAX OFFICER
[Citation -1985-LL-0218-1]

Citation 1985-LL-0218-1
Appellant Name P. SUNDERESWARAN
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 18/02/1985
Assessment Year 1975-76
Judgment View Judgment
Keyword Tags profit in lieu of salary • reference application • voluntary retirement
Bot Summary: Whereas on the first issue, the CIT decided the appeal in favour of the assessee following a number of decisions of the Tribunal such as in the case of A.P. Pakvas a ITA No. 37//1979, P.S. Sequeira ITA No. 1379//78- 79, Shri S.L. Sethaya ITA No. 95/(Bom)/1981. Turning to the assessee's appeal, Shri Mistry submitted that all what the CIT has stated is that s. 89(1) deals with salary paid in arrears or in advance having been received in any financial year for more than twelve months. Shri Mistry then submits that the amount of Rs. 32,181 which the assessee received in terms of(i) was a profit in lieu of salary in view of the provisions of s. 17(3)(i) the relevant words being an amount of any compensation received by an assessee from his employer at or in connection with the termination of his employment. Shri Mistry then added that an amount of Rs. 32,181 accrued to the assessee in terms of(i) on 15th April, 1974 as the assessee's services were being terminated from 15th April, 1974. We find merit i n Shri Mistry s submission that the words specifically brought to our notice govern the issue and that the assessee is entitled to relief under s. 89(1) of the Act. We find merit in Shri Mistry's reliance on the AAC's order in the assessee's own case for the subsequent year. Accordingly, we vacate the order of the CIT so far as the second issue in the assessee's appeal is concerned and restore the matter tot he file of the ITO for enabling him to allow the assessee relief under s. 89(1) as is due in terms of r. 21-A of the IT Rules, 1962.


N.Y. TAMHANE, A.M. These two appeals filed by assessee and second by Revenue arise out of CIT (A)'s order dt. 18th June 1982 in 1975-76 proceedings of individual. As such, they are disposed of by this common order. Records disclose that assessee was employee of M/s Burmah Shell Oil Refineries Co and that w.e.f. 15th April, 1974 he prematurely retired from services in accordance with scheme of voluntary retirement introduced by M/s Burmah Shell, for its management staff. For asst. yr. 1975-76 in terms of his order dt. 9th Feb., 1982 ITO computed assessee's total income at Rs. 1,23,150. Included in this income was salary from M/s Burmah Sehll of Rs. 91,140, Which among others included redundancy compensation of Rs. 87,300. Against assessment as made assessee filed appeal on two issues, one related to action of ITO in bringing to charge in assessment amount of Rs. 551,19 which in terms of employer's letter dt. 14th April, 1974 was to "accrue and become due to on 15th April, 1975. second dispute related to assessee's claim for relief under s. 89(1) of Act. Whereas on first issue, CIT (A) decided appeal in favour of assessee following number of decisions of Tribunal such as in case of A.P. Pakvas ITA No. 37/ (Bom)/1979, P.S. Sequeira ITA No. 1379/ (Bom)/78- 79, Shri S.L. Sethaya ITA No. 95/(Bom)/1981. On second issue CIT (A) held that s. 89(1) deals with salary paid in arrears or in advance having been received in any financial year for more than 12 months. It is true that compensation received under s. 17(3) is also referred to in s. 89, but in instant case, amount fell due on two specific dates and, therefore, in my opinion, s. 89(1) had no applicability to facts of this case. appellant's claim to relief under s. 89(1) has, therefore, been rightly rejected by ITO. As regards Revenue's appeal Shri Prem Kumar stated that even though there are two grounds issue relates to correctness of action of CIT(A) in deleting from assessment of year 1975-76 amount of Rs. 55,119 which in terms of employer's letter dt. 14th April, 1974 was to "accrue and become due to you on 15th April, 1975". Shri Prem Kumar urged that reliance by CIT (A) on orders of Tribunal brought to his notice was not justified. Shri Mistry for assessee relies on orders of Tribunal. He filed with us copy of order in case of P.S. Sequeira ITA no. 1739/ (Bom)/1978-79 dt 28th May 1979 and also copy of order in R.A. No. 1724/(Bom)/1979 in case of Anup P. Pakwasa dismissing reference application arising out of ITA No. 37/ (Bom) 1979. Having heard parties and examined record we find that whereas Sequeira like assessee before us today was employee of petroleum company. Pakvasa was employee of IDM. Excepting this difference we find no difference whatsoever regarding terms of voluntary retirement offered by employer. Accordingly, we find no justification to interfere with decision of CIT (A) on issue raised by Revenue's appeal. As such, Revenue's appeal is dismissed. Turning to assessee's appeal, Shri Mistry submitted that all what CIT (A) has stated is that s. 89(1) deals with salary paid in arrears or in advance having been received in any financial year for more than twelve months. Shri Mistry submits that CIT (A) was in error in understanding that s. 89(1) relates only to salary payment of two types referred to by him specifically in his order brought to our notice and reproduced above. Shri Mistry brought to our notice relevant words of s. 89(1) which takes in its campass profit in lieu of salary. relevant words are " payment which under provisions of cl. (3) of s. 17 is profit in lieu of salary". Shri Mistry then submits that amount of Rs. 32,181 which assessee received in terms of (b)(i) was profit in lieu of salary in view of provisions of s. 17(3)(i) relevant words being " amount of any compensation received by assessee from his employer at or in connection with termination of his employment". Shri Mistry then added that amount of Rs. 32,181 accrued to assessee in terms of (b)(i) on 15th April, 1974 as assessee's services were being terminated from 15th April, 1974. Shri Mistry then brings to our notice Circular No. 331 issued by CBDT being P. No. 174/102/79-IT(A.1) dt 23rd March, 1982. Shri Mistry states that on basis of this circular specifically assessee has obtained, in terms of AAC's order for year 1976-77 dt 26th Nov., 1983, relief under s. 89(1) in respect of amount of Rs. 55,119 which is subject matter of appeal by respect of amount of Rs. 55,119 which is subject matter of appeal by Department. Shri Mistry further added that so far as he is aware that Department has accepted AAC's order in sub-sequential proceeding. Shri Prem Kumar relied on order of CIT (A). Having heard parties and examined record, we are of opinion that CIT(A) erred in coming to decision that payment off type of Rs. 32,181 is not covered by provisions of s. 89(1) of Act. We find merit i n Shri Mistry s submission that words specifically brought to our notice govern issue and that assessee is entitled to relief under s. 89(1) of Act. We find merit in Shri Mistry's reliance on AAC's order in assessee's own case for subsequent year. Accordingly, we vacate order of CIT (A) so far as second issue in assessee's appeal is concerned and restore matter tot he file of ITO for enabling him to allow assessee relief under s. 89(1) as is due in terms of r. 21-A of IT Rules, 1962. In result, whereas Revenue's appeal is dismissed and that assessee's appeal is allowed. *** P. SUNDERESWARAN v. INCOME TAX OFFICER
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