1981 (2) TMI 78 - HC - Income Tax

Summary

Issues:
1. Interpretation of the Family Pension Scheme, 1964 in relation to taxation of family pension received by the widow of a deceased government employee.
2. Assessment of income tax on the family pension received by the widow for the assessment years 1973-74 and 1974-75.
3. Whether the Tribunal's decision to tax only 1/4th of the pension received by the widow was correct.

Analysis:

The High Court dealt with Income-tax Cases related to the assessment years 1973-74 and 1974-75, concerning the taxation of family pension received by the widow of a deceased government employee under the Family Pension Scheme, 1964. The widow received Rs. 1,200 as family pension during the relevant accounting period for the assessment year 1973-74. The Income Tax Officer (ITO) taxed the entire amount, leading to appeals by the widow against the decision. The Tribunal, however, found that only one-fourth share of the pension amount should be considered as the widow's real income for tax assessment purposes.

The Tribunal's decision was based on the understanding that the family pension was meant for the family of the deceased government employee as a whole, not for individual family members. The Tribunal emphasized that the widow was merely a collector of the family pension on behalf of the family, which included her, one minor son, and two minor daughters. The Tribunal further highlighted that the shares of family members in the pension were definite and ascertainable, leading to the conclusion that only the widow's share could be taxed, as it was her income.

The High Court, after considering the provisions of the Family Pension Scheme, 1964, concurred with the Tribunal's interpretation. It emphasized that the scheme was designed for the benefit of the family as a unit, comprising the widow, minor sons, and daughters of the deceased government employee. Therefore, the widow's taxation should be based on her definite and ascertainable share of the family pension. Consequently, the High Court dismissed the petitions filed by the revenue, upholding the Tribunal's decision to tax only 1/4th of the pension received by the widow.

In conclusion, the High Court found no merit in the revenue's petitions and dismissed them with costs, concurring with the Tribunal's decision regarding the taxation of the family pension received by the widow under the Family Pension Scheme, 1964 for the assessment years 1973-74 and 1974-75.