N.J. HARTNETT v. SECOND INCOME TAX OFFICER
[Citation -1985-LL-0819]
Citation | 1985-LL-0819 |
---|---|
Appellant Name | N.J. HARTNETT |
Respondent Name | SECOND INCOME TAX OFFICER |
Court | ITAT |
Relevant Act | Income-tax |
Date of Order | 19/08/1985 |
Assessment Year | 1980-81 |
Judgment | View Judgment |
Keyword Tags | accrual of income • gratuity fund |
Bot Summary: | The assessee retired from I. T. C. Ltd. At the time of retirement he was entitled to receive a gratuity of Rs. 53,560. The ITO held that the entire gratuity of Rs. 53,560 accrued toes the assessee at the time of retirement and after allowing exemption of Rs. 30,000 added the balance in the income assessable for the assessment year 1980-81. Since, according to the Gratuity Fund Rule of the company, only Rs. 30,000 accrued at the time of retirement, the balance was not assessable on retirement but would become taxable only on the dates on which it became actually payable. The learned departmental representative argued that the entire gratuity in one lump sum became due to the assessee after retirement and the postponement of part of the gratuity to a later date or dates will not affect the accrual of income to the assessee. According to rule 8 of the Gratuity Fund Rules the maximum survival gratuity calculated in accordance with rule 7(b) or Rs. 30,000, whichever is lower, would accrue and become payable to the member immediately on cessation of the employment with the company. According to rule 9 of the Gratuity Fund Rules, half of the balance of the maximum survival gratuity, if any, after payment of the amount due in accordance with rule 8, will accrue and become due and will be payable by the trustees 13 months after the cessation of the employment of the member. Further, the right to receive the installments mentioned in rules 9 and 10 of the Gratuity Fund Rules will accrue to the assessee only if the member is alive on that date and is not working in any other firm competing with the former employer. |