V.D. TALWAR (DEAD) AND AFTER HIM HIS HEIRS vs THE COMMISSIONER OF INCOME-TAX, BIHAR

The Supreme Court held that the payment of Rs. 25,200 made to the assessee, Mr. V. D. Talwar, was salary in lieu of notice and not compensation for loss of employment under Section 7 of the Indian Income-tax Act, 1922. The Court clarified that since the payment was in accordance with the terms of his employment contract, it constituted a revenue receipt liable to taxation. The High Court's decision against the assessee was upheld, confirming the Income-tax Appellate Tribunal's ruling.