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TMI Blog2007 (12) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... l Work. He has served with a number of corporate entities such Hindustan Ciba-Geigy, Parke-Davis India Ltd., etc. The Standard Chartered Bank had appointed the HIM as head of Human Resources for India for a period of four years starting from 31-10-1993 to ending on 22-10-1997. As per the terms of contract the assessee at the end of his contract received a sum of Rs. 16,45,604. He has shown the above amount as capital in nature. 3. The ld. Assessing Officer in order to verify the nature of this receipt has directed the assessee to produce the appointment letter and the correspondence between HIM and the bank in respect of his appointment as well as the alleged "end contract payment". The assessee on the strength of clause ( e ) incorporated in contract of employment contended that sub-clause ( ii ) of clause ( e ) restrain the assessee to take up employment with any foreign bank or foreign financial company on completion of contract. He pointed out that this condition provided in the contract restrain him for taking any job with the foreign bank, hence, the payment made at the end of the contract as provided in clause ( e ) should be treated as capital in nature. 4. The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the bank, the details of which has been provided by the bank to the ld. Assessing Officer. The ld. Assessing Officer further observed that the certain conditions provided in clause ( e ) of appointment letter are vague and in fact do not effect the employability of the assessee in the other fields, hence, in the opinion of Assessing Officer such condition do not restrain the assessee for seeking employment in other organizations. In para 16 of the assessment order the Assessing Officer observed that bank was not able to trace the personal files of the assessee in its office and godown. According to the Assessing Officer the bank does not have the original letter of appointment. The Taxation Manager and Human Resources Manager, who appeared before the Assessing Officer has stated that in their file which is relating to income-tax, only a photocopy of appointment letter is available. The Assessing Officer further observed that alleged condition does not specify the specific time-limit for the restriction and how in case of violation the bank would execute such restriction. The documents executed between the assessee and the bank is not a registered one, hence, it is not enforcea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, to the extent to which it is chargeable to tax under rule 6 of Part A of the Fourth Schedule; and ( vii )the aggregate of all sums that are comprised in the transferred balance as referred to in sub-rule (2) of rule 11 of Part A of the Fourth Schedule of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under sub-rule (4) thereof; ( viii )the contribution made by the Central Government or any other employer in the previous year, to the account of an employee under a pension scheme referred to in section 80CCD; (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 with the termination of his employment or the modification of the terms and conditions relating thereto; ( ii )any payment (other than any payment referred to in clause ( 10 ), clause ( 10A ), clause ( 10B ), clause ( 11 ), clause ( 12 ), clause ( 13 ) or clause ( 13A ) of section 10), due to or received by an assessee from an employer or a former employer or from a provident or other fund [* * *], to the extent to which it does not consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g different measures for different aspects of services received from the employee, the payment nevertheless retain the character of compensation to the employee for the skill, labour and the time put in the employee for the benefit of employer. Section 17(3) of the Act provides that if any amount of compensation is received by an assessee from his employer or from a former employer in connection with termination of his employment or the modification of the terms and conditions of the services then such amount would also come within the ambit of salary. 8. In the light of above provision if we look into the conditions provided in the appointment letter in clause ( e ) (extracted supra ) then it would reveal that this amount received by the assessee does not come within the ambit of salary. The conditions enumerated in clause ( e ) are mutually dependent and essential. If any one of the condition is violated by the assessee then he would have not been entitled for the amount. Earning of this amount was dependent upon all these three conditions, i.e., continuous employment, good conduct and non-taking of post retirement job with any foreign bank or foreign financial services co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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