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- Entitlement to deduction under section 16(i) of the Income-tax Act, 1961 for pension received by a retired Commissioner of Income-tax. Analysis: The judgment by the High Court of CALCUTTA involved a question of law regarding the entitlement to deduction under section 16(i) of the Income-tax Act, 1961 for a retired Commissioner of Income-tax receiving pension. The Income-tax Officer disallowed the standard deduction claimed under section 16(i) on the grounds that the assessee was not an employee. However, the Tribunal considered the issue carefully and concluded that the assessee is entitled to the deduction under section 16(i) based on the provisions of sections 15, 16, and 17 of the Income-tax Act, 1961. The Tribunal emphasized that the definition of "salary" under section 17 includes pension, and therefore, the assessee should be allowed the deduction under section 16(i) for the pension received. Furthermore, the judgment highlighted the legislative intent behind allowing deductions under sections 16 and 24 of the Income-tax Act, which are based on a legislative formula rather than actual expenditure incurred by the assessee. This legislative scheme aims to provide deductions irrespective of the actual expenditure incurred by an assessee incidental to employment. The judgment also referenced a similar provision in section 24 where deductions are allowed for repairs without the need to prove the exact expenditure, contrasting it with section 37 where actual expenditure must be proven for deduction. Moreover, the judgment emphasized that the extension of the definition of salary to section 16 would be meaningless if an assessee receiving pension could not benefit from the deduction under section 16(i). The court also dismissed the argument regarding the employer-employee relationship, stating that the pension received was part of the terms of employment and entitlement of the assessee. The judgment referenced a previous decision of the Punjab and Haryana High Court and agreed with the views expressed in that judgment. In conclusion, the High Court of CALCUTTA upheld the Tribunal's decision, ruling in favor of the assessee's entitlement to deduction under section 16(i) of the Income-tax Act, 1961 for the pension received. The judgment provided a detailed analysis of the legislative provisions and the intent behind allowing such deductions, emphasizing the inclusive definition of "salary" under section 17 to encompass pension for the purpose of deductions under section 16(i).
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