- (1.)THE assessee, a pensioner, sought deduction of Rs. 2,085 claiming the same to be standard deduction under Section 16 of the I. T. Act, 1961 (hereinafter called "the Act" ), from his pension amounting to Rs. 10,850 for the assessment year 1976-77. The deduction was declined by the ITO. However, the AAC allowed the deduction, which was sustained by the Income-tax Tribunal. The Tribunal, at the instance of the Revenue, referred the following question for the opinion of this court: "whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that standard deduction under Section 16 (i) of the Income-tax Act, 1961, dealing with deductions from salary is available even in respect of income derived from pension which is taxed under the head ' Salaries ' ? "
(2.)THE income-tax reference in question at the first stage came up for hearing before a Division Bench consisting of late B. S. Dhillon J. and S. P. Goyal J. Both the judges wrote separate opinions dissenting from each other. The papers were then placed before the Hon'ble Chief Justice in view of the provisions of Section 259 of the Act, and that is how this matter is before me.
(3.)THE assessee rested his claim for deduction on the ground that his pension amount constituted salary by virtue of the provisions of Section 17 of the Act, which, inter alia, has declared pension to be salary for the purpose of Sections 15/16, which permits, inter alia, standard deduction from salary.