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TMI Blog1969 (12) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... nt from the Life Insurance Corporation of India, in accordance with the Staff Regulations of 1960, is exempt from tax by virtue of the proviso to Explanation 2 of sub-section (1) of section 7 of the Indian Income-tax Act, 1922 ? " On his retirement from the Life Insurance Corporation of India, the assessee, Sri B. Gopalakrishna Murthy, in accordance with the Staff Regulations of the Life Insurance Corporation of India, received retirement gratuity of Rs. 11,250 from his employers. The Life Insurance Corporation of India deducted the tax at source on the payment of gratuity made to the assessee and the assessee also returned it for the assessment year 1960-61. The Income-tax Officer accordingly taxed that gratuity. Later on, the assessee re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to income-tax any payment of death-cum-retirement gratuity received after the 16th day of April, 1950, under the revised Pension Rules of the Central Government or under any similar scheme of a State Government, a local authority or a corporation established by a Central, State or provincial Act........(Underlining ours). The Life Insurance Corporation of India is a corporation which has been established by the Act of the Central Government and that is the " Life Insurance Corporation Act, 1956 ". Payment of gratuity to the assessee is not a solitary and individual payment to the assessee, but it has been made to the assessee under a scheme framed by the Life Insurance Corporation of India for payment of gratuity to its permanent e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to reduction of staff or reorganisation of establishment. (2) Under the Liberalised Pension Rules of the Central Government, gratuity is payable to an officer who has put in five years of qualifying service when he retires from service. B. (1) Under the regulations of the Life Insurance Corporation of India, gratuity is payable in the case of employees specified in (A) up to a maximum of 15 months' terminal basic pay or 25,000 rupees, whichever is less, on the date of cessation of service. (2) Under the Liberalised Pension Rules of the Central Government, gratuity that is payable is fixed at 9/20th of the emoluments of an officer for each completed year of service subject to a maximum of 15 times the emoluments and in the case of death ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e employees. In the former scheme, the maximum is limited to Rs. 25,000 and in the latter to Rs. 24,000. Whereas, under the former scheme, gratuity is payable on voluntary resignation or on dispensation of service owing to reduction of staff or reorganisation of establishment, under the liberalised pension rules, gratuity is not payable under these circumstances. Thus, it is clear that under both the schemes the object of the employers is to provide some amount in lump sum to its permanent employees at the termination of their service as a reward for honest service. However, in some minor details as regards the quantum that is to be paid, there is slight variation in one scheme from the other. Would this slight variation in minor details m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mink coat was stolen was of a 'similar character' to charges alleging attempts to swindle underwriters by setting fire to a yacht. " (See Stroud's Judicial Dictionary, 3rd edition, volume 4, page 2791). In Walker v. Wood a disabled person, who owned a motor car adapted for hand controls in order that he might be able to drive it, also owned and occupied an ordinary brick built garage annexed to his house for garaging the vehicle. He claimed that the garage was exempt from rates as being similar to exempt structures supplied for the same purpose by the Minister of Health. Such a structure as supplied by the minister was big enough to house a car, had a roof, sides and back of corrugated asbestos sheeting and galvanised sheet doors and was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have carefully considered the above rulings which have been cited before us. In our judgment two schemes will be considered as similar when the basic object or the purpose they serve by their introduction are the same or substantially the same, although they differ in minor details. The object and purpose behind both the schemes of the Life Insurance Corporation of India and the revised Liberalised Pension Rules of the Central Government are the same, i.e., to provide handsome gratuity to its honest and permanent employees who have faithfully served the employer. Though there are slight differences in regard to the computation of the quantum of gratuity to be paid they are in our opinion similar and the assessee is, therefore, entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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