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TMI Blog2004 (6) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... mily pension at the prescribed rates as per separate orders issued by Ministry of Law and Justice, Government of India. The assessee in the present appeal contends that dearness relief is a form of social insurance and is not covered under section 17 of the Income-tax Act and is exempt from income-tax. 3. Before answering the question, the relevant statutory provisions of Income-tax Act, 1961 may be set out. Section 2(24)(iii) of the Income-tax Act defines income as under: "2. (24) 'income' includes- ... (iii) the value of any perquisite or profit in lieu of salary taxable under clauses (2) and (3) of section 17;" Section 17 defines 'salary' which is chargeable to income-tax as per section 15. "17. For the purposes of sections 15 and 16 and of this section,- (1) 'salary' includes- ... (iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages;..." Sub-section (3) of section 17 gives inclusive definition of 'profits in lieu of salary' as extracted below:- "(3) 'profits in lieu of salary' includes- (i) the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led labour, the remuneration is generally called 'salary'. 6. Now, the basic question which is required to be considered in the present appeal is whether dearness relief received by the assessee is covered within the purview of 'profits in lieu of salary' as defined under section 17(3) of the Act. Contention of the ld. Counsel is that dearness relief has been unilaterally extended to the retired Government employees in addition to the pension as a gesture of goodwill and such voluntary payments which are ex-gratia in nature cannot be regarded as profits in lieu of salary. Ld. Counsel contended that dearness relief is granted to the retired Judges of High Court and Supreme Court by the general order of Ministry of Law and Justice and Company Affairs, Government of India and the said amount is neither chargeable to Consolidated Fund of India nor recoverable from the State Government as is the case with the pension. According to the ld. Counsel, only pension is covered within the meaning of salary as per section 17(1)(ii). 7. Ld. Counsel next contended that since dearness relief is not a part of the pension, the amount is not covered under section 17(1)(ii) of the Act. In support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a employment consideration; and (iii) That it must not be a payment falling under any of the clauses of section 10 specified in parenthetical clause of section 17(3)(ii). In my considered opinion, dearness relief, being in the nature of recompense or reward for the services rendered by the employee, is clearly covered under the expression 'profits in lieu of salary'. It cannot be regarded as a payment made on personal or extra employment considerations. The words 'due to or received' occurring under section 17(3)(ii) are, in my opinion, all embracing and bring any payment due or received by the ex-employee within its sweep. The Legislature has designedly used both the words 'due to or received'. They are disjunctive and so they made the intention manifestly clear bringing thereby within the net of taxation the amounts that fall due though not received as well as the amounts that were received without the same being due. It appears to me that the words used by the Legislature 'any payment - received' in section 17(3)(ii) clearly reflects the legislative intention that even if the amount is paid voluntarily and not in fulfilment of any contractual or other legal obligation by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Class I. It has already been held earlier that the provisions of 1958 Rules were applicable to the High Court Judges also by virtue of Rule 2 of the Judges Rules, 1956. Thus it is abundantly clear that the Judges of the High Court are also entitled to the relief mentioned in rule 17(2) of the 1958 Rules. The entitlement of retiring Judges for dearness relief as per rule 17(2) extracted above has been upheld by the Allahabad High Court in M.C. Desai's case which has been cited by the learned counsel. Thus, payment of dearness relief by the Government is in fulfilment of legal obligation and cannot be treated as gratuitous or voluntary in nature. The argument of the learned counsel is, therefore, entirely misconceived and is rejected. 13. The next contention of the ld. Counsel based on the distinction between the words 'allowance' and 'relief, in my opinion, does not bear scrutiny. It is the content of the definition of 'profits in lieu of salary' and not the appellation used by the Government for the payment made that matters. Once it is accepted that payment of dearness relief is referable to employment and represents the addition to salary and thus attracts the content of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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