S N BHARGAVA Vs. ASSISTANT COMMISSIONER OF INCOME TAX
INCOME TAX APPELLATE TRIBUNAL
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B.S. Saluja, Judicial Member -
(1.) THE assessee has filed the appeal against the order of DCIT(A), - Range-I, New Delhi dated 6-2-1992 mainly on the ground that the personal pay granted to the assessee for undergoing Vasectomy operation is exempt under Section 10 and does not fall within the definition of "income" and that the DCIT(A) has wrongly confirmed the disallowance of compulsory deduction from salary towards Provident Fund which deduction has overriding title on the salary.
(2.) The assessee filed the return of income on 29-4-1988 declaring the net income of Rs. 28,488. In response to notice under Section 143(2) the assessee filed written submissions before the Assessing Officer in support of claims made by him with reference to special pay and certain compulsory deductions made from salary on account of contributions towards CGHS, CGEIS and PF. The Assessing Officer without much discussion on the aforesaid exemption claimed by the assessee, disallowed the amount of Rs. 106 towards contribution to CGHS, Rs. 960 towards contribution to CGEIS, Rs. 1500 as personal pay for undergoing Vasectomy operation and Rs. 3,421 as compulsory deduction @ 6 per cent of salary towards PF.
On appeal, the DCIT(A) considered the claims of the assessee for exemption with reference to compulsory deductions towards PF, CGHS and CGEIS in the light of the decision of Hon'ble Supreme Court in the case of State Bank of Travancore v. CIT  158 ITR 102, as relied upon by the assessee. After detailed analysis of the nature of the compulsory deduction of PF in the light of aforesaid decision, the DCIT(A) observed that "in the facts before me there is a situation like suspended animation where some portion of the appellant's income is compulsory deduction towards provident fund which will be available to the appellant at his retirement and some percentage of the deposit can be made available to the appellant even before the retirement during the course of service". With reference to the deductions towards CGEIS, DCIT(A) observed that the same is to provide insurance cover to the appellant and his family members and such deduction cannot be said to be diversion of income of the appellant as they remained deposited in favour of the appellant for his own benefit to meet any contingent liability. Similarly the deduction towards CGHS is to meet any unforeseen contingent liability towards health of the Government employee and his family members and that at times the Government has to incur more expenses on meeting medical expenses of the employee and his family members than the amount which is so deducted. The DCIT(A) thus disallowed any deduction on these amounts. With reference to claim of the assessee for exemption of Rs. 1,500 as personal pay for undergoing Vasectomy operation under Section 10(17A) or Section 10(17B), the DCIT(A) observed that the said provisions pertained to the awards/reward which have been approved by the Central Government for which notifications are issued by the CBDT from time to time after seeking approval of the Government. He further observed that there is no such award for the Vasectomy operation for which notification has been issued by the Board and hence no exemption would be given to the appellant for payment/increment received for Vasectomy operation. Aggrieved, the assessee has filed the present appeal.
(3.) THE assessee, Shri S.N. Bhargava mentioned at the outset that he is not pressing his claims with reference to deductions made from his salary towards CGHS and CGEIS and that he is also not pressing ground Nos. 4 & 5. With reference to personal pay granted to him after undergoing Vasectomy operation, he referred to the provisions of Section 10(1 7A) and (17B), as in force in the assessment year 1988-89 and also office memorandum No. 7(39)-EIII/79 dated 4-12-1979 issued by the Government of India, in the Ministry of Health, placed at page 36 of the paper book. He submitted that the special increment in the form of personal pay as referred in the said office memorandum and granted to Government servants who had undergone Vasectomy operation for the purposes of promoting small family norms, is in the nature of an award/reward and that such award/reward is clearly exempted under the provisions of Section 10(17A) / (17B). In this connection he also referred to the definitions of the words "award" and "reward" as given in Brake's Law Dictionary, extracts placed at pages 28 to 31 of the paper book and submitted that the meaning of award also includes "to confer as being deserved or merited" as also a prize. Further, the word "prize" has been defined to mean "a reward offered to the person who, among several persons or among the public at large, shall first (or best) perform a certain undertaking or accomplish certain conditions, an award or recompense for some act done, some valuable-thing offered by a person for something done by others". THE word "reward" has been defined to mean "a recompense or premium offered or bestowed by Government or an individual in return for special or extraordinary services to be performed, or for special attainments or achievements, or for some act resulting to the benefit of the public, as a reward for useful inventions, for the discovery and apprehension of criminals, that which is offered or given for some service or attainment, sum of money paid or taken for doing or forbearing to do, some act". He further submitted that the learned DCIT(A) has misconstrued the said provisions of Section 10 and has wrongly observed that a notification is necessary before an exemption can be allowed under the said provisions. He submitted that the office memorandum in question has been issued by the Central Government and that there is no further need for any approval by the Central Government and that strictly speaking there is no requirement for issuing a notification under the said provisions. He also referred to certain literature place in the paper book wherein it is mentioned that population problem is draining the economy of India and is a hindrance in raising the standard of people and that the small planned family is in public interest. In view of the foregoing he submitted that the personal pay being drawn by him should be declared as exempt under the aforesaid provisions of Section 10. With reference to compulsory deductions of 6% of the salary towards PF, he requested that the Tribunal may kindly admit the same as an additional ground as the same arises out of the order of the learned DCIT(A) and due to typing error the same has not been included in ground No. 3. THE learned departmental representative did not object to the admission of the said additional ground. THE same is, therefore, allowed to be admitted.;
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