1989 (5) TMI 80 - AT - Income Tax

Summary

Issues:
1. Exemption under section 10(13)(ii) for accumulation of superannuation fund.
2. Exemption under section 10(10AA) for leave salary received upon resignation.

Detailed Analysis:

1. The first issue revolves around the exemption under section 10(13)(ii) for the amount of Rs. 39,554 representing the accumulation of the superannuation fund received by the employee. The Income Tax Officer (ITO) initially rejected the claim, arguing that the employee's ill-health was temporary and did not render him permanently unable to work. However, the Commissioner allowed the claim, stating the amount was exempt under the said provision. The key contention was whether the employee needed to be permanently incapacitated for the exemption. The Tribunal analyzed the medical certificates and interpreted the term "incapacitated" to include temporary incapacity leading to the employee leaving the employment. The Tribunal noted that the employee's incapacity at the time of resignation was crucial, even if he later took on another job. Considering the circumstances, the Tribunal confirmed the Commissioner's decision and rejected the appeal on this ground.

2. The second issue concerns the exemption under section 10(10AA) for the leave salary of Rs. 5,880 received by the employee upon resignation. The ITO initially denied the exemption, stating there was no provision for leave salary exemption under the Act. However, the Commissioner allowed the claim, considering it as a superannuation benefit covered under section 10(10AA). The dispute centered around whether resignation qualified for the exemption related to earned leave at the time of retirement. The Tribunal referred to a decision of the Madras High Court, which held that the provisions of section 10(10AA) apply even in cases of voluntary retirement due to resignation. Following this precedent, the Tribunal concluded that the exemption was available to the employee. Consequently, the Tribunal rejected this ground of appeal as well.

In conclusion, the Tribunal dismissed the appeal, upholding the decisions of the Commissioner regarding both the exemption under section 10(13)(ii) for the superannuation fund accumulation and the exemption under section 10(10AA) for the leave salary received upon resignation.