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TMI Blog2004 (12) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case, the learned Tribunal was justified in law in fully concurring with the reasonings of the Appellate Assistant Commissioner granting exemption to the payments received in lieu of leave encashment to the assessee while in service? 2. Whether, on the facts and in the circumstances of the case, learned Tribunal was justified in law in not giving effect in the cases under considering to the amendment to section 10(10AA) by the Taxation Laws (Amendment) Act, 1984 (Part I) which has been amended retrospectively with effect from the assessment year 1978-79?" The assessment year 1983-84 is involved in the present reference. The brief facts of the case are as follows: The assessee-respondent, an employee of the District Co-operative Bank Limited, Bijnore, for the accounting period ended on March 31, 1983, relevant to the assessment year 1983-84 received a certain sum of money by way of leave encashment from the District Co-operative Bank, Bijnore. The Income-tax Officer treated the said receipt by way of leave encashment as the assessee's salary income in terms of section 15 read with section 17 of the Act. He negated the assessee's claim for exemption in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on,- "17(1) 'salary includes- (i) wages; (ii) any annuity or pension; (iii) any gratuity; (iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages; (v) any advance of salary; (va) any payment received by an employee in respect of any period of leave not availed of by him; . . ." The expression "salary" for the purposes of computing income for charging purposes will mean only as defined under section 17 of the Act. The chargeability of a receipt has to be adjudged with reference to section 17 and de hors section 10 which directs certain receipts to be excluded from the computation of the income. If a receipt is not chargeable under section 17 it is unnecessary to examine section 10 as it cannot be decided with reference to the said section. If any receipt does not fall within the ambit of section 17 and is also included in the exemptible limit under section 10, it shows that the Legislature by way of abundant precaution refers to them in section 10 (see Rani Amrit Kunwar v. CIT [1946] 14 ITR 561 (All)). It may be noticed here that clause(1)(va) was inserted by the Taxation Laws (Amendment) Act, 1984 with effect from April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be approached for clarification, the Legislature cannot be approached as the Legislature, Rafter enacting a law or Act, becomes functus officio so far as that particular Act is concerned and it cannot itself interpret it. No doubt, the Legislature retains the power to amend or repeal the law so made and can also declare its meaning, but it can be done only by making another law or statute after undertaking the whole process of law making. (J.P. Bansal v. State of Rajasthan, AIR 2003 SC 1405, para. 12). G.P. Singh on Statutory Interpretation (8th edition) 2001 has observed as follows: "It may look somewhat paradoxical that the plain meaning rule is not plain and requires some explanation. The rule, that plain words, require no construction, starts with the premise that the words are plain, which is itself a conclusion reached after construing the words. It is not possible to decide whether certain words are plain or ambiguous unless they are studied in their context and construed." The Supreme Court explained the principle of ejusdem generis in the case of Grasim Industries Ltd. v. Collector of Customs [2002] 4 SCC 297, 304; [2002] 128 STC 349, 356 (SC) as follows: "The rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and employee and contract of employment. To put it differently the phrase "or otherwise" will not cover such cases where there is no severance of relationship of employer and employee and the assessee continues to be under the employment of the same employer, and receiving the leave encashment. This interpretation is in consonance of the legislative history of the section as well as it also manifests the intention of the Legislature to give a limited benefit to an employee with respect to the income received by the employee at the time of his retirement or superannuation or severance of relationship. In the case of M. Krishna Murthy v. CIT [1985] 152 ITR 163 (AP), the High Court interpreting the phrase "profits in lieu of salary" held that the expression "salary" will include the sum received by the assessee towards the leave encashment amount. With a view to give a limited relief to a retiring employee clause (10AA) was inserted in section 10 of the Act. Reference was made by learned standing counsel towards Circular No. 394 dated September 14,1984. The relevant portion of the said circular reads as follows: "6.2 It has come to notice that attempts have been made by taxpayers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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