1981 (5) TMI 20 - HC - Wealth-tax

Summary

Issues:
1. Whether the amount representing benefit to the assessee's children from the United Nations joint Staff Pension Fund should be excluded from the assessee's total income for the assessment year 1967-68?

Analysis:
The case involved a question regarding the taxation of benefits received by the assessee's children from the United Nations joint Staff Pension Fund. The assessee, a retired individual who previously worked for the World Health Organization, received a pension from the Fund along with an additional benefit for his children. The Income Tax Officer (ITO) included these amounts in the assessee's total income, considering them as profits in lieu of salary. The Appellate Authority Commission (AAC) upheld the inclusion of these amounts in the assessee's income but allowed for one-third of each amount to be excluded based on the contribution made by the assessee to the Fund. The Tribunal, however, held that the pension could not be correlated to the assessee's contribution and included the entire amount in the assessee's income. Regarding the children's benefit, the Tribunal upheld the exclusion of one-third of the amount, stating it was strictly for the benefit of the children and not taxable as the assessee's income.

The Tribunal's decision was challenged, and the High Court analyzed the nature of the payment from the Fund benefiting the assessee's children. The Court examined the regulations of the United Nations joint Staff Pension Fund, which detailed the contributions made by participants and member organizations, as well as the benefits payable upon retirement. The Court noted that the children's benefit was payable to the child and not the participant, continuing even after the participant's death. The Court concluded that since the benefit was recoverable by the child and did not fall under the provisions of Section 17 of the Income Tax Act, it should not be included in the assessee's income.

Referring to a previous decision, the Court clarified that the exemption under Section 18(b) of the United Nations (Privileges and Immunities) Act extended to pensionary benefits. However, in this case, the Court focused on the child's benefit being the income of the child and not the participant, exempting one-third of the children's benefits from taxation. The Court answered the question in favor of the assessee, allowing for costs and counsel's fee.

In conclusion, the High Court ruled that the children's benefit from the United Nations joint Staff Pension Fund should be excluded from the assessee's total income to the extent of one-third, as it was deemed the income of the children and not the assessee.