- (1.) These are two appeals from certain orders in income-tax proceedings. Civil Appeal No. 457 of 1960 is against the order dated March 26, 1958, of the High Court of Judicature at Bombay refusing to call upon the Income-tax Appellate Tribunal to state a case under S. 66(2) of the Indian Income-tax Act, Civil Appeal No. 458 of 1960 is against the order dated August 13, 1956, of the Income-tax Appellate Tribunal, deciding an appeal under S. 33(4) against the department.
(2.) The respondent was an employee of the Dalmia Cement and Paper Marketing Co., Ltd. By an agreement dated October 11, 1943 he was appointed to look after the Bombay Office Organisation of the Company at a remuneration of Rs. 4,000/- per month. The Company undertook to pay income-tax and super-tax due and payable on this amount of remuneration at the rate prescribed in the yearly Financial Acts, and also to pay conveyance and entertainment allowance as may be agreed upon from time to time. The term of employment of the respondent was for a definite period of 25 years commencing from April 1, 1943, the Company reserving to itself the right to depute the respondent to look after the interest of any other concern and to arrange for the remuneration to be paid to the respondent either by the other concern or by itself. It was further agreed that should the services of the respondent be terminated before the expiry of 25 years, on account of the Company "severing connection with" the respondent or terminating the office of employment due to any reason whatsoever, the respondent would be entitled to compensation "calculated as equivalent to Rs. 40,000/- for each unexpired year of the duration of his employment."
(3.) The respondent worked as an employee of the Company till sometime in 1949. By letter dated February 14, 1950, the employment of the respondent was terminated with effect from November 30, 1949, and on account of the unilateral termination of the employment, the respondent was awarded a sum of Rs. seven lacs which was called "compensation for the cessation of employment." It was recited in the letter intimating that the employment was terminated that the quantum of compensation had been considered and had been mutually agreed upon, the respondent having as a consequence of the termination of his employment claimed compensation. The income-tax authorities sought to tax this amount of Rs. 7 lacs under S. 7 of the Indian Income-tax Act. The Income-tax Officer brought the amount to tax, but in appeal to the Appellate Assistant Commissioner the order was reversed. That order was confirmed by the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal was called upon by the Commissioner to state a case under S. 66(1) but the Tribunal declined to do so. An application by the Commissioner under S. 66(2) to the High Court was rejected. The Commissioner of Income-tax has with special leave appealed to this Court against the order of the Tribunal under S. 33(4) disposing of the appeal and against the order of the High Court refusing to call upon the Tribunal to state a case.;