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TMI Blog1986 (4) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ted three more persons in a position superior to that of the assessee. Therefore, he was relegated to the fourth position in the company, thereby causing considerable reduction in status and power. It is the case of the assessee that as result, he felt humiliated and insulted and underwent considerable mental agony. Therefore, he preferred to resign from the company and he did so with effect from July 27, 1967. The assessee joined M/s. Sriram Fertilisers Corporation of India on the next day, i. e., July 28, 1967, on emoluments which were better than what he was drawing earlier. The period of his service with M/s. Oriental Power Cables Ltd., Kota, was less than five years. Daring the aforesaid period, the assessee accumulated balance in his provident fund to the extent of Rs. 28,217, which he received after his resignation from the said company. The question arose whether the aforesaid accumulated balance received by the assessee was assessable in his hands in terms of rule 8 of Part A of the Fourth Schedule to the Income-tax Act, 1961, as his income from salary. According to the Revenue, the amount was assessable in the hands of the assessee. On the other hand, the assessee claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehand as without offer of employment, it would have been foolish to leave the job and be on the street. To arrive at the above finding, the Appellate Assistant Commissioner held that since rule 8 was applicable in the assessee's case, inclusion of accumulated balance due and becoming payable to the assessee participating in a recognised provident fund in the total income and demanding tax from the assessee in terms of rule 8 was not justified. Accordingly, the assessee's appeal was allowed. The Department went in appeal against the order of the Appellate Assistant Commissioner before the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, on the following ground : "On the facts and in the circumstances of the case, the Appellate Assistant Commissioner of Income-tax erred in holding that the accumulated balance in a recognised provident fund paid to the assessee on resigning his appointment was exempt in terms of rule 8 of Part A of the Fourth Schedule to the Income-tax Act, 1961. " The Tribunal was of the opinion that the interpretation of the words "service has been terminated " as used in clause (ii) of rule 8 as done by the Appellate Assistant Commissioner was not correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate that there were reasons beyond the control of the assessee. In that case, the Tribunal had found on the facts that the assessee tendered his resignation for reasons recorded in the employer's letter dated August 23, 1967, and the reasons so mentioned were held beyond the control of the assessee. The Tribunal found that the employer wrote the letter bona fide and not for any ulterior motive. On the basis of this factual finding by the Tribunal, the Calcutta High Court held that the Tribunal has correctly applied the provisions of rule 8, sub-clause (ii) of Part A of Schedule IV to the Income-tax Act, 1961. The learned counsel for the assessee submitted that the circumstances leading to the assessee's resignation from his service with M/s. Oriental Power Cables Ltd., Kota, should be construed as beyond his control and the assessee was, therefore, entitled to the benefit of rule 8(ii) of Part A of Schedule IV to the Income-tax Act, 1961. The difference between resignation and termination is that resignation is given voluntarily by the employee while the act of termination is at the instance of the employer. The short question which is involved in this case is, in case the empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... governing the conditions of his service to the contrary, it will not be open to the public servant to withdraw his resignation after it is accepted by the appropriate authority." Raj Kumar's case, AIR 1969 SC 180, was also considered in P. Kasilingam v. PSG College of Technology, AIR 1981 SC 789, in which the Hon'ble Supreme Court again reiterated that the services of a Government servant normally stand terminated from the date on which the letter of resignation is accepted by the appropriate authority, unless there is any law or statutory rule governing the conditions of service to the contrary. While making the said observations, the Hon'ble Supreme Court also held that there is no reason why the same principle should not apply to the case of any other employee. In Abdul Salam v. State of Kerala [1973] Lab IC 1585, it was held that resignation becomes effective only when it is accepted and not when it is posted. It was a case of termination of employment by resignation. In Southern Roadways Ltd. v. K. Padmanabhan [1978] 53 FJR 190 (Kar), the point under consideration was if an employer secures resignation of any of his employees by force or against his will, whether it would a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e services of an employee under an employer. In our opinion, the Tribunal did not consider all the aspects of the matter. In our view, in the facts and circumstances of the case, the Tribunal was not justified in law in holding that the use of the words " service has been terminated " in clause (ii) of rule 8, Part A of the Fourth Schedule to the Income-tax Act, 1961, does not cover the case of termination of service on resignation by an employee. Therefore, our answer to the reference is that, in deciding the case, the Tribunal will have to consider as to whether the finding arrived at by the Appellate Assistant Commissioner of Income-tax is correct or not. If the Tribunal agrees that the finding recorded by the Appellate Assistant Commissioner of Income-tax, in his order dated March 6, 1973, was correct, in that eventuality, the case of resignation would amount to termination of service on causes beyond the control of the assessee, otherwise not. In view of the above, our answer to the question referred to us, therefore, is in the negative, against the Department and in favour of the assessee. The Tribunal will consider the case in the light of the observations made by us. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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