1979 (6) TMI 1 - HC - Income Tax

Summary

Issues:
1. Whether the reward granted by the Central Government to the respondent, an Income-tax Officer, is exempted under section 10(17B) of the Income-tax Act, 1961?
2. Whether the conclusion of the Appellate Tribunal that the reward amount is not assessable to tax is justified and reasonable?

Analysis:
The respondent, an Income-tax Officer, received a reward of Rs. 1,060 from the Central Government for his meritorious work during the voluntary disclosure scheme. The Income-tax Officer disallowed the exemption claim, citing the absence of a notification under section 10(17B) of the Income-tax Act. However, the Appellate Assistant Commissioner and the Tribunal both upheld the exemption claim. The key issue was whether the reward qualified for exemption under section 10(17B) of the Act.

The Tribunal detailed the circumstances under which the reward was granted, emphasizing that it was given in public interest as a token of appreciation for the staff's hard work during the voluntary disclosure scheme. The Ministry of Finance explicitly stated that the reward was granted for the success of the scheme and was equal to one month's basic pay. This explanation highlighted the public interest nature of the reward, aligning with the requirements of section 10(17B) of the Act.

The Court noted that the reward met the criteria set out in section 10(17B) as it was granted for public interest purposes, without the need for any additional approval beyond the circumstances outlined in the circular. The judgment emphasized that the voluntary disclosure scheme was designed to bring out suppressed black money, reduce inflation, and provide relief to individuals afraid of high taxation consequences. Therefore, the grant of the reward was deemed to be in public interest, fulfilling the statutory requirements.

Ultimately, the Court found no merit in the Income-tax Officer's argument that a notification was necessary for the exemption under section 10(17B). The Court dismissed the petition, stating that no question of law arose from the Tribunal's order. Even if a legal question did arise, the answer was self-evident based on the facts presented. The judgment concluded that the reference would be academic and unnecessary, leading to the dismissal of the petition without costs.