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TMI Blog1979 (11) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,500 from his employer company. The assessee's case was that he had suffered certain loss of movable assets in Pakistan at the time of partition to the extent of Rs. 15,430 and that he made a request to his employer to compensate him therefor and that it was in partial grant of this request that the employer gave him a sum of Rs. 9,500. The question is whether this amount is liable to tax in the hands of the assessee as " profits in lieu of salary ". In I.T.R. No. 18 of 1971, the assessee, Jai Karan Kohli, was an employee of two sugar mills, the Ramkola Sugar Mills Co. Ltd., and the Mahalakshmi Sugar Mills Co. Ltd. He was there employed in Nawanshahr in Pakistan. It appears that due to the disturbances consequent on and preliminary to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except for the reference to the amount which in the case of Jai Karan Kohli is Rs. 5,000 and in the case of Lachhman Dass is Rs. 9,500. We shall, therefore, set out only the questions in the case of Lachhman Dass, which are as under: " 1. Whether, on the facts and in the circumstances of the case, the amount of Rs. 9,500 paid by the assessee's employer has been rightly held by the Tribunal to be assessable in his hands ? 2. " Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the amount of Rs. 9,500 was not exempt under section 10(14) of the Income-tax Act, 1961 ?" It is easy to answer the second question. It is clear that the payment in question does not fall within the terms of this claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such a case the payment would be received by the employee in a capacity other than as an employee. In such a case the payment would be by way of general liability for tort or under some special enactment which he would be entitled to receive irrespective of whether he is an employee or not. This illustration clearly shows that the section should not be interpreted in such a wide manner as is suggested by the department to bring within its purview all the payments which may be received by an employee from an employer. It is clear that the section cannot include payments though they may be received by an employee from an employer where the payment is made not on account of a master and servant relationship but on account of personal conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that the Tribunal was not correct in holding that merely because the assessee had received payment from his employer the amount was liable to be taxed under s. 17(3)(ii). The circumstances of the payment clearly show that the payment had no relation to the services rendered by the assessees as employees. This was merely a payment sanctioned by the employers to the respective employees to compensate them for the personal loss they had suffered during the time of the partition of the country. We are unable to find any element of remuneration for services in these payments and though the payments were made by the employer to the employee they were, in our opinion, payments made on personal grounds and on sympathetic considerations. Mr. M. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1922 Act, any payment received by an employee from an employer or former employer fell within the definition of " profits ". In s. 17(3) of the 1961 Act the section started differently by saying that " profits in lieu of salary " includes certain things and, in this context, it had to use the word " any ". Mr. Verma also made a point about the fact that s. 17 (3)(ii) specifically exempts certain types of payments from the purview of profits in lieu of salary and argued that, therefore, any other payment not falling within these provisions would be liable to tax. Here again the reference to the various clauses of s. 10 is only clarificatory. Even without the reference in parenthesis contained in s. 17(3)(ii), the payments made under the sev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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