1995 (7) TMI 11 - HC - Income Tax

Account Books, Assessed Income, Cash Credits, Inaccurate Particulars, Income Returned, Penalty Proceedings, Returned Income Less Than 80 Per Cent

Summary

Issues:
- Interpretation of section 18(b) of article V of the United Nations (Privileges and Immunities) Act, 1947 regarding exemption of pension received by a widow of a deceased United Nations employee from income tax.

Analysis:
The judgment delivered by the High Court of Andhra Pradesh addressed the issue of whether the pension received by a widow of a deceased United Nations employee is exempt from income tax under section 18(b) of article V of the United Nations (Privileges and Immunities) Act, 1947. The case involved the widow of a former United Nations employee who received a family pension from the United Nations joint Staff Pension Funds. The Income-tax Officer initially denied the exemption claimed by the widow under section 18(b) of the Act. However, the Income-tax Appellate Tribunal later ruled in favor of the widow, stating that the pension received by the deceased employee would have been exempt, therefore the widow's pension should also be exempt from taxation. The central issue revolved around the interpretation of the exemption provided under section 18(b) of the Act.

The court examined the provisions of the United Nations (Privileges and Immunities) Act, 1947, particularly article V which deals with the officials of the United Nations Organisation. Section 18(b) of the Act exempts United Nations officials from taxation on salaries and emoluments paid to them by the United Nations. The court noted that a plain reading of the provision indicates that officials of the United Nations Organisation are exempted from tax on salaries and emoluments. This exemption extends to pensions received by former employees of the United Nations.

Referring to previous judgments, the court cited decisions from the Karnataka High Court, Delhi High Court, and Calcutta High Court which supported the view that pensions received by former United Nations employees or their widows are exempt from taxation under section 18(b) of the Act. The Calcutta High Court specifically highlighted that pensions are part of the terms and conditions of employment earned by employees through their service, and therefore, should be considered exempt under the Act. The court agreed with the reasoning of the previous judgments and upheld the Tribunal's decision in favor of the widow.

In conclusion, the High Court approved the Tribunal's judgment and answered the question posed in the affirmative, ruling in favor of the assessee (widow) and against the Revenue. The court emphasized the nexus between the pension received by the widow and the employment of her deceased husband, affirming that the exemption under section 18(b) of the Act applies to such pensions.