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TMI Blog1982 (6) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... see would be entitled to participate in the company is provident fund and gratuity schemes. The standard employment terms applicable to all senior staff would be applicable in the assessee's case also and his services could be terminated by three months' notice. 4. The company had constituted a superannuation scheme with effect from 1-1-1973. Under this scheme, the employer-company would contribute in respect of each member, an annual contribution equal to two months' salary of the member. These contributions will be held by the trustees of the superannuation scheme. There is no requirement that the employee should make any contribution. As a matter of fact, no employee has been called upon to make any contribution. The contribution made by the company would be available to the members of the staff under certain contingencies and circumstances. Normally, they are available on the retirement of the employee. But it could be available under such circumstances when the employee withdraws from the scheme on an earlier date. The benefits would be claimed under an annuity purchased by the trustees with the Life Insurance Corporation of India. However, the employees have other options. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of leaving the service or the date of earlier withdrawal, as the case may be. (iii) If the member's services are terminated on account of fraud or misconduct or the member leaves the service of the employer in anticipation of such termination, he will not be entitled to any benefits under the Scheme. The Trustees shall in such circumstances credit the contributions and interest thereon in respect of him to the 'Surplus Account'." It will be seen from the above clause that in case an employee leaves the service within a period of 10 years, the amount which will be payable would be at the discretion of the employer-company. Clause 10 also states that the benefits shall be vested in the member on leaving the company, and that is also subject to the discretion of the company. 6. Owing to certain exigencies, the assessee had to leave the services on 1-1-1979. He did not complete 10 years of service with the company. The Board of Directors of the company passed a resolution on 21-3-1979. According to this resolution, the condition regarding minimum service of 10 years for making of superannuation payment may be waived and the Trustees of the Scheme would be informed accordingly. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, it is said : "From the cases discussed above it would appear that sums deducted from an employee's salary by way of contribution to a superannuation or similar fund form part of his 'emoluments'. On the other hand Edwards v. Roberts (1) and Richardson (Inspector of Taxes) v. Lyon(s) leave in some doubt the circumstances in which payments made for the benefit of an employee and not deducted or paid out of his salary would form part of his emoluments." Now, the two cases cited really does not throw any light on this issue. In Edwards v. Roberts 19 TC 618 (CA), the issue was the year in which the payments by a fund akin to superannuation fund would be taxed : whether in each year when the employer makes the contribution or the year in which the employee becomes entitled to receive. Both the parties had proceeded on the footing that such receipts are taxable. So this decision does not help. The decision in 25 TC is one of those odd reports where there is no speaking order at all. 11. Now the employee makes no contribution to the superannuation fund. At any rate, the fund we are concerned with is so. The employees would be entitled to receive from the fund what is due to them, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral, and applies to all cases of payment at the termination of service, sub-clause (ii) is special and applies to funds from which payments are made. And the special provision carves out a portion only from the terminal compensations to be brought to taxation. That portion is the contribution made by the employers to the fund or the interest thereon. The rest is taken as not taxable. 16. Even in the part that is made taxable, i.e., the contribution of employers to the funds, a further exception is carved out ; the contribution made by the employer to a superannuation fund is taken out of the ambit of taxation. 17. Thus, it would appear that either in general law or in the extended definition of 'income' under section 2(24) receipts from the superannuation fund would not be taxable. 18. We must see how far the above analysis is inconsistent with certain statutory provisions which would show a contrary position. Under section 10(13) receipts from superannuation fund under certain specified circumstances are exempt. The implication is that otherwise they are taxable. If the above analysis is correct, and payment from superannuation fund is always exempt, it may be asked what was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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