Commissioner Of Income-Tax vs V. Y. Kolhatkar on 25 November, 1994

Bombay High Court
Commissioner Of Income-Tax vs V. Y. Kolhatkar on 25 November, 1994
Equivalent citations: 1995 (2) MhLj 74
Author: D B Saraf
Bench: B Saraf, S Jhunjhunwala


JUDGMENT

DR. B.P. Saraf, J.

1. By this reference under section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question of law at the instance of the Revenue to this court for opinion :

“Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the amount of pension received by the assessee from the United Nations Joint Staff Pension Fund after his retirement is exempt from tax, in view of the provisions of section 18(b) of article V of the Schedule to ‘the United Nations (Privileges and Immunities) Act, 1947’ ?”

2. The controversy in this case is in a very narrow compass. The assessee was serving in the United Nations Organisation. During the year under consideration, he got pension from the United Nations Joint Staff Pension Fund. The amount of pension received by him during the previous years relevant to the assessment years 1973-74 and 1974-75 was Rs. 16,860 and Rs. 13,340, respectively. The assessee claimed exemption in respect of the said amount under the provisions of section 18(b) of article V of the Schedule to the United Nations (Privileges and Immunities) Act, 1947 (Act 46 of 1947). The claim of the assessee was allowed by the Income-tax Officer. However, the Commissioner of Income-tax being of the opinion that the order of the Income-tax Officer granting exemption to the assessee in respect of the amount of pension was erroneous and prejudicial to the interest of the Revenue, initiated suo motu revision proceedings under section 263 of the Act and directed the Income-tax Officer to withdraw the exemption granted to the assessee in respect of the above amounts received by the assessee as pension from the United Nations. The assessee appealed to the Tribunal. It was contended by the assessee before the Tribunal that the pension received by him was exempt from taxation by virtue of section 18(b) of article V of the United Nations (Privileges and Immunities) Act, 1947. The Tribunal accepted this contention of the assessee and approved the order of the Income-tax Officer and set aside the order of the Commissioner passed on revision. The Tribunal observed that what was exempt by virtue of section 18(b) of article V of the United Nations (Privileges and Immunities) Act, 1947, was not only the salary but also “emoluments”. Hence, this reference at the instance of the Revenue.

3. We have carefully considered the order of the Tribunal. We have also perused the relevant provisions of the United Nations (Privileges and Immunities) Act, 1947. This Act has been enacted to give effect to the convention on the privileges and immunities of the United Nations, It confers certain privileges and immunities on the United Nations and its representatives and officers. These privileges and immunities are available notwithstanding anything to the contrary contained in any other law. The provisions of this Act have thus an overriding effect over other enactments on the subject. Section 2 of this Act reads :

“2. Conferment on United Nations and its representatives and officers of certain privileges and immunities. – (1) Notwithstanding anything to the contrary contained in any other law, the provisions set out in the Schedule to the Act of the Convention on the privileges and immunities, adopted by the General Assembly of the United Nations on the 13th day of February, 1946, shall have the force of law in India.

(2) The Central Government may, from time to time, by notification in the Official Gazette amend the Schedule in conformity with any amendments, duly made and adopted, of the provisions of the said Convention set out therein.”

4. The relevant provision of the Schedule having bearing on the controversy in the present case is clause (b) of section 18 of article V which reads as below :

“Article V.

Officials.

17. . . .

18. Officials of the United Nations shall :. ..

(b) be exempt from taxation on the salaries and emoluments paid to them by the United Nations;. . . .

5. Under the above clause, salaries and emoluments paid to officials of the United Nations by the United Nations are exempt from taxation. The question that arises for consideration is whether “pension” falls in “salary or emoluments”. We do not find any difficulty in deciding this controversy in view of the fact that for the purpose of computation of income under the head “Salaries” under sections 15 and 16, the expression “salary” has been defined in the Income-tax Act itself to include “pension”. Otherwise also, the expression “emoluments” would have been wide enough to include “pension”. We are, therefore, of the clear opinion that the exemption granted under clause (b) of section 18 of article V of the United Nations (Privileges and Immunities) Act, 1947, is applicable to the pension paid by the United Nations to its officials. We are supported in our above conclusion by the decision of the Karnataka High Court in the case of CIT v. K. Ramaiah [1980] 126 ITR 638 and the Delhi High Court in CIT v. Dr. P. L. Narula [1984] 150 ITR 21.

6. In view of the above, the question referred to us is answered in the affirmative and in favour of the assessee. In the facts and circumstances of the case, there shall be no order as to costs.

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