1980 (8) TMI 76 - HC - Income Tax

Summary

Issues:
1. Whether pension received from the United Nations is exempt from taxation under the United Nations (Privileges and Immunities) Act, 1947 and Section 17 of the Income Tax Act, 1961?

Detailed Analysis:
The judgment involved two separate cases concerning the taxation of pension received from the United Nations by the respective assesses for the assessment years 1972-73 and 1975-76. The core issue revolved around the interpretation of the United Nations (Privileges and Immunities) Act, 1947, and Section 17 of the Income Tax Act, 1961, to determine if the pension received was exempt from taxation. The Income Tax Appellate Tribunal, Bangalore Bench, referred the common question to the High Court for its opinion.

In the first case (I.T.R.C. No. 93 of 1977), the assessee received a pension from the United Nations during the relevant assessment year. The Income Tax Officer (ITO) initially rejected the claim for exemption from taxation, but the Appellate Authority and the Tribunal accepted the contention. The second case (I.T.R.C. No. 122 of 1978) also involved a similar scenario where the claim for exemption was initially denied by the ITO but later accepted by the Appellate Authority and the Tribunal. The Commissioner referred both cases to the High Court for opinion.

The High Court analyzed the provisions of the United Nations (Privileges and Immunities) Act, 1947, and Section 17 of the Income Tax Act, 1961. Section 18, cl. (b) of art. V of the Schedule to the 1947 Act exempted officials of the United Nations from taxation on salaries and emoluments. The ITO contended that this exemption did not extend to pensionary benefits as it applied only to salaries and emoluments during service. However, the High Court noted that Section 17 of the Income Tax Act, 1961, defined "salary" to include any annuity or pension. Therefore, any pension received by the assessee fell within the description of "salary" under the Income Tax Act, making the immunity granted under the 1947 Act applicable.

The High Court upheld the decisions of the Appellate Authority and the Tribunal, citing a similar decision by the Income-tax Appellate Tribunal, Delhi Bench 'B'. The High Court concluded that the pension received from the United Nations was indeed exempt from taxation under the United Nations (Privileges and Immunities) Act, 1947, and Section 17 of the Income Tax Act, 1961. Consequently, the High Court answered the referred question in both cases in favor of the assessee.