State Bank Of Travancore vs Commissioner Of Income Tax, Kerala on 8 January, 1986
6. We have carefully considered the submissions made by both the parties on the aforesaid grounds of appeal. With reference to the claim of the assessee that the special increment granted to him by way of personal pay should be treated as exempt under the provisions of Section 10(17A)/ (17B), we feel that the submissions made by the learned departmental representative have merit and the said personal pay cannot be treated as an award/reward under the aforesaid provisions of Section 10 as neither it is in the nature of an award for literary, scientific or artistic work or attainment or for services for elevating the distress of poor, the weak and the ailing or for proficiency in sports and games instituted by the Central Government and nor it is in the nature of a reward for certain purposes which have to be approved by the Central Government under the provisions of Clause (17B) in public interest. The office memorandum issued by the Ministry of Health relating to grant of special increment does not make any reference to the provisions of Income-tax Act or give any impression that the said increment is in the nature of an award/reward and that the employee will be eligible for income-tax exemption. Normally, where the intention is to grant any exemption from income-tax, the relevant schemes floated by the Government of India would make a mention to that effect or special announcements are made in that behalf. In the circumstances, we reject the claim of the assessee. With reference to compulsory deduction of PF, we feel that the assessee has wrongly relied on the decision of the Hon'ble Supreme Court in the case of State Bank of Travancore (supra), inasmuch as, he has only picked up an observation of the Hon'ble Supreme Court that "if there is any diversion of income at source under any statute or by overriding title, then there is no income to the assessee", which has been made in the context of the facts of the case which basically related to charging of interest on certain advances, termed as sticky advances. The said observation of the Hon'ble Supreme Court cannot be applied to the facts of the assessee's case as the amount of 6% deducted out of the salary of the assessee towards PF, though compulsory in nature, is ultimately refundable to the assessee along with interest and also serves a social and public purpose insofar as it provides for the social security of the employee and the members of his family. We, therefore, feel that the DCIT (A) has rightly disallowed the claim of the assessee and we see no reason to interfere with his orders in this behalf.