Arijit Pasayat, C.J.
1. At the instance of the Revenue, the following questions have been referred for opinion of this court under Section 256(1) of the Income-tax Act, 1961 (in short, 'the Act'), by the Income-tax Appellate Tribunal, Delhi Bench 'A', New Delhi (in short, 'the Tribunal') :
'1. Whether, on the facts and in the circumstances of the case, the Tribunal is legally correct in holding that Section 89(1) was applicable to the assessor's case ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal is legally correct in holding that the amount of leave encashmenttogether with regular salary of the assessed represented salary for more than 12 months ?'
2. The factual position, which is almost undisputable is essentially as follows :
For the assessment year 1972-73 corresponding to the financial year 1971-72 the assessee, an individual, claimed relief under Section 89(1) of the Act in respect of Rs. 10,709, received on account of encashment of accumulated leave. The Income-tax Officer rejected the claim on the ground that such relief was admissible only in response to the asscssee's salary being paid in arrears or in advance or by reasons of salary for more than 12 months having been received in any one financial year. He held that the amount received by assessed on encashment of accumulated leave did not represent either arrears or advance of salary and, thereforee, Section 89(1) had no application. The assessed challenged the matter in appeal before the Appellate Assistant Commissioner (in short 'the AAC'). The said authority was of the view that the assessed was entitled to relief under Section 89(1) as according to him, payment in question could be brought within the scope of Section 17(1)(vi) of the Act and, thereforee, was included within the term 'salary'. The Revenue carried the matter in appeal before the Tribunal. It assailed the Appellate Assistant Commissioner's conclusion on the ground that Section 17(1)(vi) had no application. The Tribunal analysed the provisions of Section 17 of the Act and observed that the Appellate Assistant Commissioner was not correct in holding that the payment received on encashment of accumulated leave is covered by Section 17(1)(vi) of the Act. It was noted that the said provision only deals with 'annual accretion to the balance at the credit of an employee participating in a recognised provident fund'. The Tribunal, however, observed that according to Section 17(1)(iv) of the Act, the expression 'salary' included 'profits in lieu of or in addition to any salary or wages' and that according to Section 17(3)(ii), 'profits in lieu of salary' included any payment, other than those specifically mentioned therein, received by an assessed from an employer or a former employer, to the extent to which it did not consist of contributions made by the assessed or interest on such contributions. It was, thereforee, held that the amount in question falls under the category of 'profits in lieu of salary' under Section 17(3)(ii) and consequently forms part of the salary of the assessee. It was further held that the provisions of Section 89(1) of the Act applied to the facts of the case. On being moved by the Revenue, the questions as set out above, have been referred for the opinion of this court.
3. We have heard learned counsel for the Revenue. There is no appearance on behalf of the assessed in spite of notice being served on him.
4. Learned counsel for the Revenue submitted that when the Tribunal accepted about the non-maintainability of the Appellate Assistant Commis-sioner's conclusion, a new case should not have been made out to uphold the Appellate Assistant Commissioner's ultimate conclusions about the applicability of Section 89(1) of the Act.
5. We find that a new provision, i.e., Section 17(1)(va), was introduced from April 1, 1978. After the inclusion, the provision reads as :
'17. For the purposes of Sections 15 and 16 and of this section,--(1) 'salary' includes-- . . .
(va) any payment received by an employee in respect of any period of leave not availed of by him.'
6. It has to be noted that Clause (va) of Section 17(1) was inserted by the Taxation Laws (Amendment) Act, 1984, with retrospective effect from April 1, 1978.
7. Section 17(3) of the Act at the relevant time reads as follows :
'(3) 'profits in lieu of salary' includes-
(i) the amount of any compensation due to or received by an asses-see from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto ;
(ii) any payment (other than any payment referred to in Clause (10), Clause (10A), Clause (10B), Clause (11), Clause (12), Clause (13) or Clause (13A) of Section 10), due to or received by an assessed from an employer or a former employer or from a provident or other fund (not being an approved superannuation fund), to the extent to which it does not consist of contributions by the assessed or interest on such contributions.'
8. Obviously, thereforee, in terms of Section 17(3)(ii) any payment other than those specified in the provision itself are included in the expression 'salary' on being treated as 'profits in lieu of salary'. Section 89(1) of the Act is in the following terms :
'(1) Where, by reason of any portion of an assessor's salary being paid in arrears or in advance or by reason of his having received in any one financial year salary for more than twelve months or a payment which under the provisions of Clause (3) of Section 17 is a profit in lieu of salary, his income is assessed at a rate higher than that at which it would otherwise have been assessed, the Assessing Officer shall, on an application made to him in this behalf, grant such relief as may be prescribed.'
9. Even a bare reading of the provision makes it clear that it has application to any payment which is made under the provisions of Clause (3) of Section 17 as a 'profit in lieu of salary'. That being the position, the Tribunal was correct in its view that Section 89(1) was applicable to the asses-see's case. Our answer for both the questions is in the affirmative, in favor of the assessed and against the Revenue.