1987 (2) TMI 88 - AT - Income Tax

Summary

Issues:
1. Interpretation of section 29A(b) of the Estate Duty Act regarding exemption of superannuation fund amount.
2. Determination of estate duty exemption on the balance amount of superannuation fund beyond Rs. 15,000.

Analysis:
The judgment involves a challenge to the action of the CED(A) regarding the exemption of a superannuation fund amount under section 29A(b) of the Estate Duty Act. The deceased was a member of an approved superannuation fund, and the accountable person claimed an exemption of Rs. 29,463 from the fund. The CED(A) allowed an exemption of only Rs. 15,000, citing section 29A(b). The tribunal examined the legislative intent behind section 29A, introduced in 1965, to exempt amounts received from approved superannuation funds from estate duty. The tribunal highlighted that payments from such funds are not liable to income tax or wealth tax, except under specific circumstances.

The tribunal analyzed the provisions of section 29A(b) and emphasized that the exemption limit is Rs. 15,000 per annum for annuities or pensions from approved superannuation funds. The tribunal clarified that the employer contributes to the fund, and the purpose is to provide annuities to employees or their dependents. The judgment highlighted relevant clauses of the Income-tax Act and Rules regarding superannuation funds, emphasizing the nature and tax treatment of such funds.

Moreover, the tribunal referred to provisions in the Income-tax Act and Wealth-tax Act to demonstrate that amounts from approved superannuation funds are generally exempt from tax. The tribunal interpreted section 29A(b) to explain that the exemption applies to the amount received by legal heirs, subject to the annual limit. The judgment provided examples to illustrate the application of the exemption based on lump sum payments or installment payments over time.

However, the tribunal noted that neither the CED(A) nor the lower authorities had examined the terms of the specific superannuation fund in question to determine the payment structure to legal heirs. Therefore, the tribunal directed the matter to be sent back to the Assistant Controller for further examination of the fund's scheme. The tribunal clarified that this decision should not affect the relief already granted by the CED(A) and instructed the Assistant Controller to decide on the exemption for the balance amount exceeding Rs. 15,000.

In conclusion, the tribunal allowed the appeal, subject to the directions provided for reevaluation of the exemption on the remaining amount of the superannuation fund beyond the initial Rs. 15,000 exemption granted by the CED(A).