Commissioner Of Income-Tax, ... vs Dr. P.L. Narula
1983 Latest Caselaw 367 Del

JUDGMENT

Chadha, J.

1. I.T. Rs. Nos. 61 to 63 of 1976 (relating to A. Ys. 1966-67 to 1968-69), I.T.R. No. 15 of 1976 (relating to A.Y. 1970-71), I.T.R. No. 198 of 1976 (relating to A.Y. 1971-72) and I.T. Rs Nos. 321 and 322 of 1979 (relating to A. Ys. 1973-74 and 1974-75) under s. 256(1) of the I.T. Act, 1961 (for short called as "the Act"), at the instance of the Department, raise one common question for the opinion of the court, namely;

"Whether, on the facts and the circumstances of the case, the Tribunal was legally right in holding that amounts received by the assessed as pensionable remuneration from the United Nations Joint Staff Pension Fund, after retirement, is exempt from taxation ?"

2. It is unnecessary to state the facts mentioned in the statements of the cases. The decision of the Income-tax Appellate Tribunal, Delhi, in the case of the assessed in this case was considered by a Bench of the Karnataka High Court in CIT V K Ramaiah (1980) 126 ITR 638. The Karnataka High Court held that the decision of the Tribunal had correctly interpreted the relevant statutory provisions of the Act as well as the United Nations (Privileges and Immunities) Act, 1947, read with s. 18, clause (b) of article V of the Schedule thereto. After the decision of the Karnataka High Court, the Central Board of Direct Taxes issued circular No. 293 dated 10.2.1981 (see (1981) 130 ITR (St.) 5) reading as follows :

"Section 2 of the U.N. (Privileges and Immunities) Act, 1947, read with section 18, clause (b) of article V of the Schedule thereto, inter alia, grants exemption from taxation to salaries and emoluments paid by the United Nations to its officials. The question whether pension received by the erstwhile officials of the United Nations from it would be exempt from income-tax was considered by the Karnataka High Court in the case of Commissioner of Income-tax v. K Ramaiah (1980) 126 ITR 638. The High Court held that since under s. 17 of the Income-tax Act, 1961, salary has been defined to include pension, if salary is exempted from tax, so shall be the pension. The Board have accepted the decision of the Karnataka High Court.

2. In view of the foregoing, apart from salary received by employees of the United Nations Organisation or any person covered under the U.N. (Privileges and Immunities) Act, 1947, pension received by them from the U.N. will also be exempt from income-tax. Pending appeals on this point may be conceded and reference applications withdrawn."

3. Not only the Department accepted the decision of the Karnataka High Court, but issued a circular for the guidance of the authorities under the Act. It is unfortunate that the Department has not decided to withdraw the reference applications in the case of the assessed.

4. The view taken by the Tribunal in these references is correct. We accordingly answer these reference against the Department and in favor of the assessed with no order as to costs.