assessee is in appeal before us against order of learned CIT(A)- XXVII, dt. 20th July, 2004 passed for asst. yr. 1998-99. grounds of appeal taken by assessee are not in consonance with r. 8 of Tribunal Rules, they are descriptive and argumentative in nature. In brief solitary grievance of assessee is that learned AO has erred in assessing receipt of Rs. 16,45,604 received by HIM from Standard Chartered Bank on his severance of his connection with said bank at end of contract, by treating receipt as ex gratia or bonus, in nature. brief facts of case are that according to assessee, he is highly qualified person in field of human resource management. He is M.A. in economics and M.A. in personnel management from Delhi School of Social Work. He has served with number of corporate entities such Hindustan Ciba- Geigy, Parke-Davis India Ltd., etc. Standard Chartered Bank had appointed him as head of human resources for India for period of four years starting from 31st Oct., 1993 to ending on 22nd Oct., 1997. As per terms of contract assessee at end of his contract received sum of Rs. 16,45,604. He has shown above amount as capital in nature. learned AO in order to verify nature of this receipt has directed assessee to produce appointment letter and correspondence between him and bank in respect of his appointment as well as alleged "end contract payment". assessee on strength of cl. (e) incorporated in contract of employment contended that sub-cl. (ii) of cl. (e) restrain assessee to take up employment with any foreign bank or foreign financial company on completion of contract. He pointed out that this condition provided in contract restrain him for taking any job with foreign bank, hence, payment made at end of contract as provided in cl. (e) should be treated as capital in nature. learned AO after going through alleged contract of service as well as explanation of assessee wrote letter to bank and enquired bank had i t had policy of restricting post retirement employment of its employees. Whether bank has put such restriction as in case of assessee in appointment letter of other executives also. AO has also enquired what were circumstances leading to employment of assessee and also asked bank to furnish personal file along with internal memos and correspondence files of assessee. On receipt of information from bank learned AO wrote letter to assessee on 20th Jan., 2003 and apprised him that in response to his letter dt. 3rd Dec., 2002 bank gave reply vide its letter dt. 14th Jan., 2003. In this reply bank has given list of 10 employees, who were top executives in different heads, i.e., finance, operation, legal and compliance, personal banking, etc. bank has informed that it has no policy of being restrictive covenant in employment of its heads. In response to show cause notice of AO assessee has pointed out that he has team of seven managers and around 108 total staff strength to cater to 24 branches employing about 3000 employees across country. According to bank policy average retirement age is of 55 years. assessee at relevant time was of 58 years of age. He has long experience under various assignments, hence, he had not applied for job to bank, rather, bank had offered such job to him. In course of his employment with bank assessee has performed different duties and he apprised AO about nature of his job. He also apprised job performed by him in between October, 1997 to October, 1998, i.e., after end of service contract with bank. Such details are available at pp. 50 to 52 of paper book. learned AO has gone through contentions of assessee in detail and rejected same. AO is of opinion that bank has no policy to put restrictive covenant in appointment of its employees. bank has not restrained post retirement employment of its top executives in past. AO for above view draw supports from appointment letters of other persons in bank, details of which has been provided by bank to learned AO. learned AO further observed that certain conditions provided in cl. (e) of appointment letter are vague and in fact do not effect employability of assessee in other fields, hence, in opinion of AO such condition do not restrain assessee for seeking employment in other organizations. In para 16 of assessment order AO observed that bank was not able to trace personal files of assessee in its office and godown. According to AO bank does not have original letter of appointment. taxation manager and human resources manager, who appeared before AO has stated that in their file which is relating to income-tax, only photocopy of appointment letter is available. AO further observed that alleged condition does not specify specific time-limit for restriction and how in case of violation bank would execute such restriction. documents executed between assessee and bank is not registered one, hence, it is not enforceable. On basis of above reasons learned AO treated this receipt as revenue in nature and brought it to tax. Appeal to learned CIT(A) did not bring any relief to assessee. Before us learned counsel for assessee reiterated contentions of assessee as raised before learned Revenue authorities below. He took us through appointment letter exhibiting terms and conditions of services. He also took us through letter of bank dt. 22nd Oct., 1997 available at p. 40 of paper book, wherein bank has informed assessee about payment he was eligible to get at end of service contract. bank also highlighted conditions enumerated in cl. (e) of service contract. This letter also reminds assessee that he cannot take up employment with any foreign bank or foreign financial services. In support of his contention learned counsel for assessee relied upon following decisions: (1) Asstt. CIT vs. Prakash G. Heblkar (2002) 77 TTJ (Mumbai) 911: (2002) 83 ITD 495 (Mumbai); (2) Saroj Kumar Poddar vs. Jt. CIT (2001) 72 TTJ (Cal) 120: (2001) 77 ITD 326 (Cal); (3) Asstt. CIT vs. A.S. Wardekar (2001) 71 TTJ (Cal) 915: (2001) 77 ITD 405 (Cal); (4) ITO vs. Anilkumar Rudra (1999) 65 TTJ (Mumbai) 593: (1999) 71 ITD 96 (Mumbai). (5) Budget Proposal Copy for asst. yr. 2001-02. On other hand, learned Departmental Representative relied upon orders of Revenue authorities below. We have duly considered rival contentions and gone through record carefully. question for our adjudication is whether amount of Rs. 16,45,604 received by assessee is in nature of ex gratia payment or salary within ambit of ss. 17(1) and 17(3) of IT Act. For adjudicating this issue, thus, it is necessary to have look at s. 17 as well as conditions enumerated in cl. (e) of contract of employment. "Salary", "perquisite" and "profits in lieu of salary" defined. For purposes of ss. 15 and 16 and of this section, (1) "salary" includes (i) wages; (ii) any annuity or pension; (iii) any gratuity; (iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages; (v) any advance of salary; (va) any payment received by employee in respect of any period of leave not availed of by him; (vi) annual accretion to balance at credit of employee participating in recognised provident fund, to extent to which it is chargeable to tax under r. 6 of Part of Fourth Schedule; and (vii) aggregate of all sums that are comprised in transferred balance as referred to in sub-r. (2) of r. 11 of Part of Fourth Schedule of employee participating in recognised provident fund, to extent to which it is chargeable to tax under sub-r. (4) thereof; (viii) contribution made by Central Government or any other employer in previous year, to account of employee under pension scheme referred to in s. 80CCD; (3) "profits in lieu of salary" includes (i) amount of any compensation due to or received by assessee from his employer or former employer at or in connection with termination of his employment or modification of terms and conditions relating thereto; (ii) any payment [other than any payment referred to in cl. (10), cl. (10A), cl. (10B), cl. (11), cl. (12), cl. (13) or cl. (13A) of s. 10], due to or received by assessee from employer or former employer or from provident or other fund (* * *), to extent to which it does not consist of contributions by assessee or interest on such contributions or any sum received under Keyman insurance policy including sum allocated by way of bonus on such policy. Explanation. For purposes of this sub-clause, expression "Keyman insurance policy" shall have meaning assigned to it in cl. (10D) of s. 10; (iii) any amount due to or received, whether in lump sum or otherwise, by any assessee from any person (A) before his joining any employment with that person; or (B) after cessation of his employment with that person." "Clause (e) End of Contract Payment: At end of four years you will be entitled to end of contract payment which will not be less than 35 per cent of your last drawn annual basic pay per year of service subject to following conditions: (i) Consistent Good Standard performance over contract period of four years. (ii) Undertaking by you not to take up employment with any Foreign Bank or Foreign Financial Services Company on completion of this contract. (iii) Completion of 4 years contract period." On bare perusal of definition of salary provided in s. 17(1) reveals that expression "salary" has vide amplitude and it takes into its fold remuneration paid to employee, whether it is labelled as salary or otherwise by employer. definition of salary in s. 17(1) of IT Act is inclusive definition and thus by providing inclusive definition, scope of provision has been widened. Even pension which is paid after relationship of employer and employee ceases to exist, has been included in definition of "salary". Thus, legislation does not confine "salary" within narrow limit of compensation for services rendered during subsistence of relationship of employer and employee but even includes benefits which may become available at end of that relationship. Sub-cl. (iv) of s. 17(1) makes specific reference to profit in addition to any salary or wages. Further, contract of employment necessarily involves rendering of services by employee to employer and use of his skill, energy and time for benefit of business in which he is employed. Therefore, as has been held by various Courts, if employer chooses to remunerate those services by adopting different measures for different aspects of services received from employee, payment nevertheless retain character of compensation to employee for skill, labour and time put in employee for benefit of employer. Sec. 17(3) of Act provides that if any amount of compensation is received by assessee from his employer or from former employer in connection with termination of his employment or modification of terms and conditions of services then such amount would also come within ambit of salary. In light of above provision if we look into conditions provided in appointment letter in cl. (e) (extracted supra) then it would reveal that this amount received by assessee does not come within ambit of salary. conditions enumerated in cl. (e) are mutually dependent and essential. If any one of condition is violated by assessee then he would have not been entitled for amount. Earning of this amount was dependent upon all these three conditions, i.e., continuous employment, good conduct and non-taking of post retirement job with any foreign bank or foreign financial services company. Thus last condition provided in cl. (e) of appointment letter restrain assessee from taking up job with any foreign bank or foreign financial company. It is negative covenant. Hon ble Supreme Court in case of CIT vs. Best & Co. (P) Ltd. (1966) 60 ITR 11 (SC) considered this issue and observed that if apparatus for earning income is extinguished and assessee received some compensation for loss of such apparatus then it will be capital in nature, i.e., if any earning apparatus is lost then compensation for such loss would capital in nature. In present case condition for not availing job with some foreign bank is condition which limited future prospective employment of assessee. opportunity of earning income with foreign bank or financial services by dint of assessee s experience has been taken away. Thus very instrument for earning income with such institution is no more available to assessee, hence, in our opinion it is capital receipt to assessee. learned AO for rejecting claim of assessee has assigned reasons that there is no policy with bank for providing such negative clause i n appointment letter. In past no such conditions has been put in appointment letters of other senior executives. conditions enumerated in appointment letter are vague. Such condition is not going to effect assessee s employability substantially. We have duly considered these objections. AO has not doubted correctness of appointment letter. bank has not denied about conditions employed in contract. conditions in appointment letter are only guiding factor for settling dispute between assessee and bank in case of any dispute. Both parties are abiding all these conditions. Hence, if terms and conditions in contract are specific then it is not necessary to take external aid determining rights of contractor and contractee. AO unnecessarily taking external circumstances for belying conditions provided in contract, more so when conditions are not prohibited by law. They are enforceable. AO has no right to take note of non-availability of alleged bank s policy for denying rights accrued to assessee by virtue of employment contract. As far as observation of AO that this negative covenant will not substantially effect career of assessee is concerned we are of view that observation is subjective one because is to be seen with prospective of assessee s employability. He may be learned man, who has potential employability in other organizations also, but capability of any individual cannot be used as negative factor against him for bringing certain receipt as revenue in nature. Thus taking into consideration all facts and circumstances we allow this appeal of assessee and direct AO to treat amount of Rs. 16,45,604 as capital in nature. In result, appeal of assessee is allowed. *** SHARAD S. PATIL v. ASSISTANT COMMISSIONER OF INCOME TAX