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TMI Blog2005 (2) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... wholly and exclusively for the purposes of making or earning income. -Both questions are answered in the negative, i.e., in favour of the assessee and against the Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant-assessee, has invited attention to the provisions of sections 15, 17(1)(iv) and 17(3)(i) of the Act to contend that the requirement of the provision was not satisfied and in the circumstances, the amount of compensation of Rs. 30,000 was not taxable either under the head "Salaries" or under any other head. He also invited attention to the amendment brought on the statute book with effect from April 1, 2002, by the Finance Act, 2001, whereunder clause (iii) came to be inserted in section 17(3) of the Act, to contend that, till March 31, 2002, any compensation received from a person other than an employer or a former employer, could not be treated as "profits in lieu of salary" so as to make it liable to tax under the head "Salaries". In this context, he invited attention to the correspondence entered into by the assessee with the payer, namely, the Mehta Group International Ltd., Projects Division, and submitted that in the facts of the case, the Revenue authorities and the Tribunal were not justified in bringing this amount of Rs. 30,000 to tax. In relation to disallowance under section 57(iii) of the Act, Mr. Shah contended that the receipt of Rs. 15,000 was taxed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) of the Act so as to be treated as an allowable deduction. He placed reliance on the decision of this court in the case of Kalindi Investment P. Ltd. v. CIT [2003] 260 ITR 261. Section 14 of the Act lays down the six heads under which all income is classified for the purposes of charge of income-tax and computation of total income under the Act. Under the head "Salaries", section 15 provides for the incomes which are chargeable to tax. Section 17 defines the terms "salary", "perquisite" and "profits in lieu of salary". At the relevant point of time, the phrase "profits in lieu of salary" was defined as under: "17.(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, due to or received by an assessee from an employer or a former employer or from a provident or other fund (not being an approved superannuation fund), to the extent to which it does not consist of contributions by the assessee or interest on such contributions." On a plain readin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from any person- (A) before his joining any employment with that person; or (B) after cessation of his employment with that person." This provision makes it abundantly clear that, till the insertion of this clause, such an amount received by an assessee, namely, from a person who is not an employer, either before or after cessation of employment with that person, is not taxable. In the circumstances, the Tribunal was not justified in holding that the amount of compensation was taxable under the head "Salaries" within the meaning of the phrase "profits in lieu of salary". In relation to the second claim, namely, allowability of a sum of Rs. 7,500 paid to Shri N. U. Raval, the facts lie in a very narrow compass. The assessee was retained by the Gujarat Small Industries Corporation for conducting a study and rendering his opinion on separation of Girnar Scooter Project asia separate company and such study report had to take within its fold, tax implications and financial requirements. The assessee accordingly received a sum of Rs. 15,000 from GSIC in two instalments Rs. 9,000 on August 4, 1981, and Rs. 6,000 on October 24, 1981. The assessee paid Rs. 6,000 on August 5, 1981, and R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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