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Issues Involved: Interpretation of section 17(3)(i) of the Income-tax Act, 1961 regarding the inclusion of a specific sum in the total income of the assessee for the assessment year 1970-71.
Summary: The High Court of Calcutta addressed a question of law referred by the Commissioner of Income-tax regarding the inclusion of a sum of Rs. 36,326 in the total income of the assessee for the assessment year 1970-71 under section 17(3)(i) of the Income-tax Act, 1961. The assessee, an employee of a company, received an ex gratia amount upon termination of employment, claiming it as a capital receipt exempt from tax based on a Supreme Court decision. The Income-tax Officer assessed the amount as compensation under section 17(3)(i). Upon appeal, the Appellate Assistant Commissioner upheld the assessment, considering the amount as compensation received. The assessee then appealed to the Tribunal, presenting arguments and relying on a previous decision in a similar case. The Tribunal, following its earlier decision in a related case, ruled that the amount was not includible in the total income. The High Court, referring to its previous decision in a similar case, held that the ex gratia payment received by the employee was voluntary and not compensation, thus not taxable as income under section 17(3). Consequently, the court ruled in favor of the assessee, answering the question in the affirmative and against the Revenue, with no order as to costs. Judge K. M. Yusuf concurred with the judgment.
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