NEWCOME P Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee in this reference is employed by Messrs. Peirce Leslie & Co. Ltd. and has been charged income-tax on Rs. 2,160 in the following circumstances. THE employer had provided for the assessee as well as for other employees old age, by instituting what is called a staff group insurance scheme. It consists in the creation of a trust for effecting insurance on their lives, and for this purpose the employer had to contribute 5% of the employees salary, whereas the employee had to give 10% of the pay. THE trust, in turn, had to take out two separate policies on the employees lives, and held them in trust.

(2.) UNDER the above arrangement, the employer had, for the year ending March 31, 1956, that being the previous year to the assessment year 1956-57, paid Rs. 2,160 to the trustee, the aforesaid amount being the annual premium on the assurance taken by the trust on the life of the assessee, who showed it in part "D" of his return. The Income-tax Officer, however, taxed it as a contribution to an unrecognised provident fund and the assessee having failed before the Appellate Assistant Commissioner appealed to the Appellate Tribunal, which held the amount to be covered by sub-clause (v) of Explanation I to section 7(1) of the Income-tax Act, hereafter referred to as the Act, and, therefore, to be chargeable. Thereafter petition under section 66(1) of the Act was filed, and the following question has been referred to us.

(3.) THE expression trustee mean the trustees for the time being of the trust deed.