181. Pension received by erstwhile officials of United Nations – Whether exempt from tax in view of section 2 of UN (Privileges and Immunities) Act, 1947

1. Section 2 of the UN (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 CIT v. K. Ramaiah [1980] 126 ITR 638.  The High Court held that since, under section 17 of the Income-tax Act, 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.

2. In view of the foregoing, apart from salary received by employees of the UNO or any person covered under the UN (Privileges and Immunities), Act, 1947, pension received by them from the UN will also be exempt from income-tax.  Pending appeals on this point may be conceded and reference applications withdrawn.

Circular : No. 293 [F. No. 200/140/80-IT(A-I)], dated 10-2-1981.

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