COMMISSIONER OF INCOME TAX Vs. RAJALAKSHMI VENKATAKRISHNAN

JUDGEMENT

(1.) AT the instance of the Department, the Tribunal referred the following question for our opinion under section 256(1) of the Income-tax Act, 1961 :

(2.) THE assessee is an individual. Her husband, Sri Venkatakrishnan, was an employee of Royal Insurance Company of the United Kingdom. On January 1, 1973, the business of Royal Insurance Company was taken over by the General Insurance Company, a Government of India undertaking. THE husband of the assessee became an employee of the General Insurance Company after leaving the service of Royal Insurance Company. After the death of the assessee's husband, the Royal Insurance Company granted an allowance at the rate of Pounds 1,638-48 per annum to the assessee in recognition of the assessee's husband's faithful and diligent service with the Royal Insurance Company from November 15, 1943. THE above allowance was granted to the assessee for her lifetime. For the assessment years 1976-77 and 1977-78, for which the corresponding accounting years ended on 31st March of the respective accounting years, the assessee received sums of Rs. 22,320 and Rs. 25,512, respectively, in pursuance of the above allowance. While making the assessments for the above two assessment years, the Income-tax Officer sought to bring to tax the above sums. THE assessee contended that the above payment by the Royal Insurance Company was made gratuitously and at the discretion of the said company. It was pointed out that the receipt was causal and, therefore, exempt from income-tax. THE Income-tax Officer held that it was an annuity received by her and taxed the above two sums under the head "Other sources". On appeal, the Appellant Assistant Commissioner held that the amount received by the assessee from the royal Insurance Company represented income in her hands and assessable under the head "Other sources". On further appeal, the Appellate Tribunal held that the receipt of Rs. 22,320 and Rs. 25,512 for the assessment years 1976-77 and 1977-78, respectively, is not taxable in the hands of the assessee since the annual payments were made not in respect of any employment or office but by the kind past employer of the late husband of the assessee and the payment was made entirely at its decoration, is continuance being uncertain and made dependent upon the existence of certain facilities referred to in the letter written by the Royal Insurance Company.

(3.) WE have heard learned standing counsel of the Department and also perused the records carefully.