| Case ID |
0061a7e1-9c8b-4bb2-a5e3-14c18df21d23 |
| Body |
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| Case Number |
Income-tax Reference No. 527 of 1972 |
| Decision Date |
Aug 17, 1983 |
| Hearing Date |
|
| Decision |
The Sindh High Court ruled that the separation allowance received by the employee, M. A. Toor, from the Corporation was a capital receipt and not liable to income tax. The court held that the payment was made as compensation for loss of employment and distinguished it from remuneration for past services. The court emphasized that the nature of the payment was crucial, focusing on whether it was compensation for loss of employment rather than a reward for past services. The Tribunal's decision was upheld, affirming that the separation allowance was exempt under the Income Tax Act. |
| Summary |
In the case of Income-tax Reference No. 527 of 1972, the Sindh High Court addressed the treatment of separation allowances under the Income Tax Act, 1922. The case involved the determination of whether a separation allowance received by M. A. Toor, an employee of General Motors Overseas Corporation, constituted a capital receipt exempt from income tax. The court analyzed the legal definitions and previous judgments regarding compensation for loss of employment. It was concluded that since the payment was made as a solatium for the loss of employment due to the cessation of business, it was not taxable as income. The decision reinforced the distinction between compensation for loss of employment and remuneration for past services, thereby setting a precedent for similar cases. This case is significant for understanding the tax implications of separation allowances and employee compensation under the Income Tax Act, highlighting the importance of the nature of payments in determining tax liability. |
| Court |
Sindh High Court
|
| Entities Involved |
Gandhara Industries Limited,
General Motors Overseas Corporation
|
| Judges |
NAIMUDDIN,
ALLY MADAD SHAH
|
| Lawyers |
Nasarullah Awan for Applicant,
Demo for Respondent
|
| Petitioners |
COMMISSIONER OF INCOME TAX
|
| Respondents |
M. A. TOOR
|
| Citations |
1984 SLD 74,
1984 PTD 368,
(1984) 50 TAX 144
|
| Other Citations |
W. A. Guff v. Commissioner of Income-tax, Bombay City (1957) 31 I T R 826,
Shaw Wallace & Co. v. Commissioner of Income-tax (1932) 2 Comp. Cas. 276,
Chibbet v. Joseph Robinson & Sons (1924) 9 Tax Cas. 48,
Commissioner of Income-tax, Bombay City v. E. D. Sheppard (1963) 7 Taxation 383,
Makesh Anantrai Pattani v. Commissioner of Income-tax (1961) 41 I T R 481,
Duff (H. H. Inspector of Taxes) v. Barlow (1942) 10 I T R 157,
P. D. Khosla v. Commissioner of Income-tax (1945) 13 I T R 436
|
| Laws Involved |
Income Tax Act, 1922
|
| Sections |
7,
7(1)
|