9911796707
TMI Blog1982 (12) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... as a capital receipt and not taxable. The ITO did not accept the claim of the assessee. He held that the refund of contribution is taxable in accordance with rule 6 of Part B of Fourth Schedule to the Income-tax Act, 1961 (' the Act '), and also not exempt under section 10(13) of the Act. The assessee appealed to the AAC. The AAC held that section 17(3)(ii) of the Act clearly states that the amount received by the assessee from an approved superannuation fund cannot be treated as ' profit in lieu of salary ' and, therefore, the amount received by the assessee is not taxable. Thus, he directed the ITO to exclude the same. Against the same, the revenue has preferred this appeal. 3. The learned departmental representative strongly urged that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. The employer Voltas Ltd. contributed certain amount every year, being employer's contribution towards superannuation fund. The assessee resigned from the said company. Thus, on his leaving the said company, he received Rs. 26,761 from his employer being the refund of contribution from the superannuation fund. The question for consideration is whether the said amount is taxable. It will be necessary to refer to the relevant provisions of the Act. Section 2(24) of the Act defines income which includes the value of any perquisite or profit in lieu of salary taxable under clauses (2) and (3) of section 17. Section 17(3) is the relevant provision for our consideration which reads as under : " profits in lieu of salary " includes--- (i) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, when he was a member of the fund, and shall be paid by the trustees to the credit of the Central Government within the prescribed time and in such manner as the Board may direct." Section 10(13) reads as under : " 10. Income not included in total income.---In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included--- (13) any payment from an approved superannuation fund made--- (i) on the death of a beneficiary ; or (ii) to an employee in lieu of or in commutation of an annuity on his retirement at or after a specified age or on his becoming incapacitated prior to such retirement ; or (iii) by way of refund of contributions on the death of a benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t does not provide that whatever is received by a person must be regarded as income liable to tax, in all cases in which a receipt is sought to be taxed as income, the burden lies upon the department to prove that it is within the taxing provision. Where however a receipt is of the nature of income, the burden of proving that it is not taxable, because it falls within an exemption provided by the Act, lies upon the assessee." Thus, it was held therein that it is for the department to establish that the receipt was chargeable to tax. The above ratio squarely applies to the instant case. 7. The revenue is not able to point out any provision under which the amount of Rs. 26,761 received by the assessee can be brought to tax. Under section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... '. We, therefore, recommend that these provisions should be recast so as to achieve their purpose and avoid unnecessary litigation." The observations in the commentaries on Income-tax by Sampath Iyengar as well as Kanga also do not help the revenue. In fact, at page 984 of Sampath Iyengar's commentary, 7th edition, it pointed out that since the Act of 1961 such payments are excluded from the assessee's income and not chargeable. 8. Rule 6 of Part B of Fourth Schedule only prescribes the rate for deduction of tax at source under section 192(5). Even rule 6 is not applicable, if the assessee falls in one of the circumstances mentioned in section 10(13). Section 10(13)(iv) speaks of circumstances like refund of contribution to an employee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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