P ARUNACHALAM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee for the assessment year 1982-83, the following question of law is referred to us for our consideration :

(2.) THE assessee was an employee and the assessee received certain payments from his employer at the time of premature termination of his contract employment with his employer, namely, Rallis India Ltd., Bombay. THE services of the assessee were terminated with effect from December 1, 1981, under a scheme styled the "Voluntary Separation Scheme" and the assessee was paid a sum of Rs. 77,490. THE question that arose before the Income-tax Officer was whether the amount received by the assessee was properly assessable as salary income. THE Income-tax Officer held that under the provisions of Section 17(3)(i) of the Income-tax Act it was profit in lieu of salary and hence it was assessable under the head "Salary". THE Appellate Assistant Commissioner of Income-tax, on appeal, held that it was only a capital receipt and not assessable to tax.