IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES “SMC”, DELHI, an appeal was filed by the appellant, Aradhya Ghosh, against the respondent, the Deputy Commissioner of Income Tax, Circle-69(1), Delhi concerning the assessment year 2017-18. The case revolves around the taxation of a ‘Disability Pension’ which was declared by the appellant and contested by the revenue department.
Aradhya Ghosh, a retired employee of the Indian Air Force, declared income from various sources in the financial year relevant to the assessment year 2017-18. Among these was a ‘Disability Pension’ amounting to Rs.8,43,226/-, which was claimed as exempt income under the revised Income Tax Return (ITR). The case was selected for scrutiny, leading to a detailed inquiry by the Assessing Officer (A.O.) regarding the nature of the pension.
The investigation into the matter revealed discrepancies in the appellant’s claim regarding the reason for retirement, leading to the pension’s taxation. The assesses took the matter to the Income Tax Appellate Tribunal (ITAT), challenging the taxation of the disability pension previously deemed exempt.
The appeal, documented in ITA No. 1788/Del./2022, raised significant questions regarding the taxability of disability pensions, particularly those associated with pre-mature retirement and not directly attributed to service-related disability. The case presented by the appellant underscored the unclear boundaries and interpretation issues surrounding tax exemptions for disability pensions under the Income Tax Act, 1961.
The tribunal’s decision to allow the appeal and direct the A.O. to delete the addition of the disability pension as taxable income underscores a landmark judgement. This decision not only impacted the appellant but also set a precedent for similar cases involving retired defence personnel and their entitlement to tax exemptions on disability pensions.
The judgement delivered by Shri Chandra Mohan Garg, Judicial Member, on 14th October 2022, concludes the case in favour of the appellant, allowing for a re-evaluation of tax exemption claims on disability pensions under specific conditions. This outcome highlights the intricacies involved in tax law and its application to individual circumstances, demonstrating the vital role of appellate tribunals in interpreting and enforcing the law.
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