9911796707
TMI Blog1982 (4) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Life Insurance Corporation (LIC) came into existence under the Life Insurance Corporation Act, 1956. The assessee vide agreement dated10-1-1957was continued as an agent of LIC on the terms and conditions mentioned in the said Act. A copy of the said agreement has been produced before me. Admittedly, the assessee in the year under consideration retired as an agent of the LIC. On his retirement the assessee was paid by way of gratuity an amount of Rs. 20,609. This payment was over and above the income earned by the assessee as an agent of the LIC in the year under consideration of Rs. 16,349. The gratuity amount of Rs. 20,609 has been taxed by the ITO under the head 'Income from other sources'. In respect of the gratuity paid to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Life Insurance Corporation of India (Agents) Regulations, 1972 and on the basis of paragraph 3 of Sixth Schedule thereof, it was urged that the gratuity admissible to an assessee, like the present assessee, was computed in the same manner as laid down in section 10(10)(i). These arguments of the assessee are controverted by the departmental representative, who has relied on the orders of the tax authorities. 6. I have given consideration to the above arguments. Section 10(10) lays down that in computing the total income of a previous year of any person, any income falling within sub clause (iii), namely, "any other gratuity received by an employee on his retirement or on his becoming incapacitated prior to such retirement or on terminatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which the work is to be done. Of course, the nature or extent of control which is requisite to establish the relationship of employer and employee must necessarily vary from business to business and is by its very nature incapable of precise definition. Generally a master is one who not only directs what and when a thing is to be done, but also how it should be done. A servant is not only a person who receives instructions from his master, but is also subject to the master's right to control the manner in which he carries out those instructions: See in this connection Dharangadhara Chemical Works Ltd. v. State of Saurashtra [1957] SCR 152, and CIT v. Lakshmipati Singhania [1973] 92 ITR 598 (All.). 7. Keeping in view the abovementioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... competent jurisdiction, etc. Paragraph 6 empowers the LIC to terminate the appointment of the assessee as an agent by written notice if in its opinion his conduct becomes such as to render him unfit to act as its agent, or if in its opinion the assessee acts in a manner prejudicial to the interests of the LIC or to the interests of its policy-holders, or if evidence comes to the knowledge of the LIC that the assessee has been allowing and/or offering to allow rebate of the whole or any part of the commission paid to him. Paragraph 7 then enumerates that on automatic termination of the assessee's agency he will not be entitled to remuneration or compensation except that he would be entitled to settlement of his account. Paragraph 8 brings ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employee between the LIC and the assessee. I say so, because the LIC under the said agreement has no right of control in respect of the manner in which the work as an agent is to be done by the assessee. The LIC is not the master of the assessee because it does not have the right to direct under the above agreement what and when a thing is to be done and also how it should be done. The assessee is not a person who receives instructions from the LIC nor is he subject to the LIC's right to control the manner in which he carries out those instructions. A relationship between the assessee and the LIC, as rightly held by the tax authorities, is that of an agent qua the principal. Since there is no relationship of master and servant between the L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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