1981 (8) TMI 147

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..... received by the assessee by encashment of unavailed leave. 2. During the previous year relevant to the assessment year 1976-77, the assessee had been employed as a director of the United India Fire & General Insurance Co. On the nationalisation of that company, the assessee opted out of the service and received terminal benefits which included a sum of Rs. 12,823 to which he was eligible by encas .....

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..... urces, the latter is not. It is well known that upon termination of services employees are generally entitled to certain terminal benefits, such as, gratuity which is a capital receipt and not income liable to tax. Since such amounts have been judicially recognised to be not income, there have been attempts to camouflage a part of the salary of other recurring amounts, which would be income, as te .....

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..... rigin, it has not yet been specifically made taxable. It is for this reason that corresponding exemption of reasonable amount as in the case of other terminal benefits, has not found a place in the statute. Therefore, in the absence of any specific provisions either taxing or exempting this terminal benefit, the issue has to be decided only on the basis of the general concept of income and capital .....

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..... an amount received for giving up amature status will be a capital receipt by giving up an asset (sic). In that case, there is a telling illustration: "Suppose there was a man who was an expert organist but was very fond of playing golf on Sundays. He is asked to become the organist of the Parish Church for the ensuing seven months at a salary or pound 10 a month for the seven months, but it is ex .....

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..... to consider the ground of appeal of the revenue that relief under section 89 should not have been granted. We, therefore, set aside the orders of the authorities below and direct the ITO to recompute the total income after excluding the amount of Rs. 12,823 which is a capital receipt and not income. 5. In the result, the cross objection is allowed and the appeal is dismissed.
Case laws, Decis .....

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