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income-tax Officer Vs. Smt. Usha Sah - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Allahabad
Decided On
Judge
Reported in(1982)1ITD774(All.)
Appellantincome-tax Officer
RespondentSmt. Usha Sah
Excerpt:
.....to the assessment year 1977-78. the assessee's husband, shri j.p. sah, was an official of the united nations who unfortunately expired. after his death, the assessee became entitled as the widow of the deceased official of the united nations to receive benefits under article 35 of the united nations joint staff pension fund. the amount received during the previous year relevant to this assessment year was rs. 60,427 by way of pension under the aforesaid article. it was claimed before the ito that this amount was exempt from tax in view of the specific provisions of clause (b) of section 18 of the united nations (privileges and immunities) act, 1947. the ito, however, held that in the first place, the assessee was not an official of the united nations and, secondly, the amount.....
Judgment:
1. This is an appeal filed by the revenue against the order of the AAC, Allahabad Range, Allahabad.

2. The assessee is an individual and the appeal relates to the assessment year 1977-78. The assessee's husband, Shri J.P. Sah, was an official of the United Nations who unfortunately expired. After his death, the assessee became entitled as the widow of the deceased official of the United Nations to receive benefits under Article 35 of the United Nations Joint Staff Pension Fund. The amount received during the previous year relevant to this assessment year was Rs. 60,427 by way of pension under the aforesaid article. It was claimed before the ITO that this amount was exempt from tax in view of the specific provisions of Clause (b) of Section 18 of the United Nations (Privileges and Immunities) Act, 1947. The ITO, however, held that in the first place, the assessee was not an official of the United Nations and, secondly, the amount received by her was not in the nature of either salary or other emoluments, since there can be said to be no employer-employee relationship between the United Nations and the assessee and, in these circumstances, the assessee was not entitled to exemption from tax on the amount of Rs. 60,427 received from the United Nations. The ITO, therefore, while completing the assessment, added this amount also to the assessee's total income.

3. When the matter went up in appeal, the AAC held that what was received by the assessee was what her husband would have received out of the United Nations Joint Staff Pension Fund, but for his death and, since the source of the payment was the United Nations, which was entitled to immunity, nothing turns on whether the payment was made to the official of the United Nations or to the official's widow or heirs in the event of death of the official, since in both the cases, the nature of payment was the same. He, therefore, accepted the assessee's claim that the amount of Rs, 60,427 received from the United Nations was exempt from tax. Aggrieved by this order of the AAC, the revenue has come up in the present appeal before us.

4. The learned departmental representative, Shri Jauhari, submitted to us that there was a distinction between the widow of an official of the United Nations and the official of the United Nations himself and the immunity from taxation is limited to payments made by the United Nations to its officials and not to any payment by the United Nations to any person whatsoever. Elaborating on his argument, Shri Jauhari submitted that while the term payment made by the United Nations to its officials may include payments made by the United Nations to its officials after their retirement from service of the United Nations, it can under no circumstances, include or cover a payment made by the United Nations to any other person even if the other person happens to be a widow or member of the family of an official of the United Nations. Summing up, Jauhari submitted to us that the assessee was not entitled to exemption from tax on the amount of Rs. 60,427 received from the United Nations Joint Staff Pension Fund.

5. On the other hand, the assessee's learned counsel, Shri Gulati, took us through the provisions of Articles 29 and 35 of the United Nations Staff Pension Fund Regulations in order to show that the retirement benefits were available to the employee only, who was also entitled to have the benefit commuted and the widow's benefit was payable by the United Nations only if the employee died and had not commuted the widow's prospective benefit or the deferred retirement benefit. On this basis, it was claimed that what was received by the assessee, who was the widow of an official of the United Nations, on his death was what the official would have himself received on the commutation of the benefit in his life time. Elaborating on his argument, Gulati submitted that the assessee as a widow in her own right was not entitled to receive anything from the United Nations and what was received by her was what was due to her husband, who unfortunately died before he could receive the retirement benefits. Reference was made by him to the judgment of the Supreme Court in the case of Benaras State Bank Ltd. v.CIT AIR 1970 SC 281, wherein their Lordships laid down that the expression "paid" should be given a wider meaning and should not be confined to the actual payment but also where an amount is unconditionally made available to another person. Our attention was invited to the order of the Appellate Tribunal in the case of ITO v.Dr. P.L. Narula [1975] Tax. 38(6)-63, which was quoted with approval by their Lordships of the Karnataka High Court in the case of CIT K.Ramaiah [1980] 126 ITR 638 and it was contended before us that if both the Appellate Tribunal as well as their Lordships of the Karnataka High Court have held that even the pension paid to officials of the United Nations, who had retired from service and were no more official, was exempt from tax, why there would be a different treatment for the pension received for the services rendered by an official of the United Nations by the official's widow, who is the assessee under consideration before us. Summing up, Gulati vehemently argued before us that the pension of Rs. 60,427 received from the United Nations was not liable to tax and the AAC rightly came to the conclusion that this was exempt from tax.

6. We have carefully considered the rival submissions. At the outset, it will be necessary to point out that in both the cases, i.e., Dr.

P.L. Narula (supra) decided by the Delhi Bench of the Appellate Tribunal and K. Ramaiah (supra) decided by the Karnataka High Court, the claim of exemption was in respect of a payment made by the United Nations to its official after his retirement from service of the United Nations. In the present case, the payment has not been made to any official of the United Nations, whether while he was in service or after his retirement but to his widow. Both of these cases will, therefore, not be applicable to the present case. It might perhaps not be out of place to mention that the Hon'ble Delhi High Court in the case of AM. CIT v. R.S. Garg [1982] 133 ITR 1 had occasion to consider whether the child's benefit under the United Nations Joint Staff Pension Fund was a payment to an official of the United Nations and came to the conclusion that even though the payment was because of the filial link between the official of the United Nations and his child to whom the payment was made, the beneficiary was the child and not the official of the United Nations and this amount, therefore, does not fall within the provisions of Section 17 of the Income-tax Act, i.e., this amount was paid to the child and consequently cannot be treated as salary or part thereof. Viewed in this context, it is not under dispute that the payment by the United Nations Joint Staff Pension Fund was not to the assessee's husband, who was an official of the United Nations, but to the assessee, who is his widow. In these circumstances, even though the payment was because of the link between the assessee, who happens to be the widow, and her husband, who was an official of the United Nations, it cannot be said that the payment was to her husband, who was an official of the United Nations and not to her. Clause (b) of Section 18 of the United Nations (Privileges and Immunities) Act, 1947, under which the exemption under consideration here was claimed, is as follows : (b) be exempt from taxation on the salaries and emoluments paid to them by the United Nations.

A plain reading of this provision shows that the exemption from tax is on the salaries and emoluments paid by the United Nations to its officials. No statutory fiction has been pointed out to us by which even though the payment under consideration here was made to the assessee, who was the widow of a deceased official of the United Nations, it is to be treated as payment made to the deceased official of the United Nations. It might also perhaps not be out of place to mention here that exemption from tax is an exception to the general rule that income is liable to tax, and consequently where the provision of a statute grants exemption from tax, it should be strictly construed. Considering all this, we have no hesitation in coming to the conclusion that the assessee was not entitled to exemption from tax on the amount of Rs. 60,427 received by way of pension from the United Nations Joint Staff Pension Fund. On this issue, therefore, the order of the AAC does not appear to be correct and is hereby reversed, while the order of the ITO is restored.


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