LAWS(CAL)-1968-9-13

COMMISSIONER OF INCOME TAX Vs. W J SHEPHERD

Decided On September 09, 1968
COMMISSIONER OF INCOME-TAX Appellant
V/S
W.J.SHEPHERD Respondents

JUDGEMENT

(1.) This is a reference under Section 66(2) of the Indian Income-tax Act, 1922. The reference is at the instance of the department. The assessee is an employee of Messrs. Avery Co. of India (Pr.) Ltd. There is an agreement between the assessee employee and his employer, Messrs. Avery Co. of India (Pr.) Ltd., which is described in a scheme made by Messrs. Avery Co. of India. We may put the scheme in the following manner:

(2.) The employee assessee contributed certain sums to that scheme. Certain other sums were contributed by the employer. The question is whether the sums contributed by the assessee employee would be exempted from taxation under Section 15 of the Indian Income-tax Act, 1922. The employer-company entered into an agreement with its employee in the aforesaid manner which implies that the company undertook certain risks ; a prudent company would ordinarily cover itself against those risks and the company in question, viz., Messrs. Avery Company of India (Pr.) Ltd. entered into a group insurance policy with Messrs. Legal and General Assurance Society Ltd. of London for the purpose of protecting itself against such risk. What payments are to be made by the employer to its insurer and whether those payments would get the benefit of Section 15 of the Indian Income-tax Act, are not the questions before us. We have referred to the arrangements between M/s. Avery Co. of India (Pr.) Ltd. and M/s. Legal and General Assurance Society Ltd. of London just to give a complete picture of the whole case. For our present purpose the insurance policy taken by M/s. Avery Co. of India (Pr.) Ltd. with M/s. Legal and General Assurance Society Ltd. of London is of no importance. The relevant fact is that an employer in India contracted with its employee in India regarding a scheme for pension and the employer agreed to bear certain burden and the employee agreed to bear certain other burden. The question is whether the relief granted by Section 15 of the Indian Income-tax Act would be granted to the employee in respect of payments for the said scheme.

(3.) It may also be mentioned that the employee was not required by the contract to pay anything towards the arrangement for cash payment on death, if any, before retirement.