COMMISSIONER OF INCOME TAX Vs. J N VAS

JUDGEMENT

(1.) BY this reference under S. 256(1) of the IT Act, 1961, the Tribunal has referred the following question of law to this Court for opinion at the instance of the Revenue :

(2.) THE facts which are relevant for the purposes of this reference may be summed up as follows : The assessee was an employee of Radiant Electric Machinery Co. He retired from the employment of the said company from 31st March, 1976. On 1st April, 1976, the assessee entered into an agreement with the said company under which he was appointed as a technical consultant to the said company under the said agreement, the assessee was to act as consultant in consideration of the annuity of Rs. 50,000 to be taken out by the said company in favour of the assessee. He was also entitled to monthly consultant fee of Rs. 600. The relevant paragraph of the said agreement read as under :

(3.) OUR attention is also drawn to the judgment of the Supreme Court in CIT vs. L.W. Russel (1964) 53 ITR 91 (SC) : TC58R.95 where it is held that the contributions made by an employer to provide deferred annuity benefits to the employees cannot be taxed in the hands of employees unless a vested right therein accrues to the employees.