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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 ..... 922 (hereinafter referred to as the " Act "), the following question of law arises for our consideration : " Whether, on the facts and in the circumstances of the case, the gratuity of Rs. 11,250 received by the assessee, on his retirement 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 Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant portion of the section which exempts the gratuity from payment of tax. It is the proviso to the second Explanation to sub-section (1) of section 7 of the Act. It reads thus : " Provided that nothing herein contained shall render 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from the Corporation on completion of superannuation, or whose services are determined either due to continued illness or accident incapacitating him from the proper discharge of his services ; and (4) whose services are dispensed with owing 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) U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat gratuity is paid to an honest and permanent employee on the cessation of his service either by retirement or by death. There is, however, slight variation in the details in regard to the computation of the quantum of gratuity that is payable to the 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 em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like, but not identical with, those named. " (101 U. S. 278, 283 ; 25 Lawyers' Edition 845). In R. v. Clayton-Wright, construing the phrase " similar character " the court held that : " A charge of attempting to swindle underwriters by pretending that a 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 bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar to that of R....... " In Rees v. Bernard Hastie Co. " Welding or cutting.....by means of electrical, oxy-acetylene or similar process was held to refer to cutting by means of a heating process and not by means of sheares which were electrically operated. " 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 handso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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