Commissioner of Income Tax vs Dr. B. Ramamurthy

Venkataswami, J.—The following common question was referred to this court u/s 256(1) of the Income Tax Act, 1961 :

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in holding that the pension received by the assessee from

the United Nations Organisation is exempt from tax for the assessment years 1976-77 and 1977-78 ?

The above question has to be answered against the Revenue in view of the Board''s Circular No. 293 dated February 10, 1981 (see [1981]

130 ITR 5), which reads as follows :

Pension received from United Nations Organisation - Taxability thereof - Regarding.

Section 2 of the United Nations (Privileges and Immunities) Act, 1947, read with section 18, clause (b) of article V of the Schedule thereto, inter

alia, grants exemption from taxation to salaries and emoluments paid by the United Nations to its officials. The question whether pension received

by the erstwhile officials of the United Nations from it would be exempt from Income Tax was considered by the Karnataka High Court in the case

of Commissioner of Income Tax Vs. Mysore Commercial Union Ltd., . The High Court held that since u/s 17 of the Income Tax Act, 1961, salary

has been defined to include pension, if salary is exempted from tax, so shall be the pension. The Board have accepted the decision of the

Karnataka High Court.

In view of the above circular, the question is answered against the Department. No costs.