Case: Commissioner of Income Tax, West Bengal I Vs. K.K. Roy

2. The material facts of the case are as follows:The assessee, an individual, was serving M/s Airways (India) Ltd. as a Manager in the year 1945. Two years thereafter he was appointed as the Managing Director of that company and he continued to bold that post till the termination of his services by the said company. His termination of the service became necessary as M/s Airways (India) Ltd., was acquired in pursuance of the policy of nationalization of Airways.Under those circumstances the Board of Directors passed a resolution deciding to pay a sum of Rs. 50,000/to the assessee as compensation for termination of his services. This amount was sought to be brought to tax by theOfficer in the assessment yearthe relevant accounting year being the financial yearThe assessee contended that the sum was not liable to tax as the receipt in question was a capital receipt. That contention was rejected by theOfficer and the decision of theOfficer was upheld by the Appellate Assistant Commissioner. But on a further appeal being taken by the assessee to theAppellate Tribunal, the Tribunal allowed contention of the assessee. It held that the receipt in question was a capital receipt. At the instance of the Commissioner the question set out earlier was referred to the High Court of Calcutta for its opinion The High Court answered that question in favour of the assessee. Thereafter this appeal has been brought by the Commissioner after obtaining a certificate from the High Court.

Reasoning: 3. In our opinion, this appeal is wholly frivolous one and the Commissioner was not justified in wasting public funds in filing such appeals. The point in issue here is covered by several decisions of this Court. It would suffice if we refer to the decision of this Court in Commissioner ofBombay City I v. E. D. Sheppard. 48 ITR 237 (AIR 1963 SC 1343 ). This court has been consistently holding that the compensations of the type with which we are concerned in this appeal are capital receipts.