1990 (2) TMI 12 - HC - Income Tax

Summary

Issues:
Interpretation of section 10(17B) of the Income-tax Act, 1961 regarding the exemption of a reward received by an individual from the Central Government.

Analysis:
The case involved a reference under section 256(1) of the Income-tax Act, 1961, where the question of law was whether a reward of Rs. 1,150 received by the assessee, who was an Income-tax Officer, was exempt from income tax under section 10(17B) of the Act. The Government of India granted the reward to income-tax personnel for their work in the Voluntary Disclosure Scheme, 1975. The assessee claimed exemption under section 10(17B), but the Income-tax Officer rejected the claim. The Appellate Assistant Commissioner and the Tribunal upheld the assessee's contention, leading to the Revenue seeking reference to the High Court.

During the hearing, the assessee did not appear, and the court considered the argument presented by the Revenue. The court analyzed the relevant provision of clause (17B) of section 10 of the Act, which exempts payments made as a reward by the Central Government for approved purposes in the public interest. The court noted that in this case, there was no evidence to show that the purpose for the reward had been approved by the Central Government for public interest as required by section 10(17B). While acknowledging that the payment was made by the Central Government and was in the public interest, the court held that without approval by the Central Government, the reward did not qualify for exemption under section 10(17B).

Therefore, the court concluded that the Tribunal was incorrect in holding that the award received by the assessee was exempt from income tax under section 10(17B) of the Act. The court answered the question referred in the negative and in favor of the Revenue. As the assessee did not appear, the court directed that each party would bear their own costs for the reference. The court also ordered the judgment to be forwarded to the Assistant Registrar, Income-tax Appellate Tribunal, 'A' Bench, Patna for further action.