62. Inserted by the IT (Amdt.) Rules, 1972, w.r.e.f. 1-4-1971.

Relief under section 89(1) is to be given in the assessment in which the extra payment by way of arrears, advance, etc., is taxed - Circular No. 331, dated 22-3-1982. Relief would also be admissible on encashment of leave salary while in service - Circular No. 431, dated 12-9-1985.

For formula for computation of relief on gratuity, see Circular No. 9-D(LIII-6), dated 17-3-1966 as modified by Circular No. 14-D(LIII-7), dated 19-4-1966. Where the Supreme Court awarded lump sum compensation in lieu of back wages and future wages in an industrial dispute with a direction that the lump sum should be spread over the back period, relief under section 89(1) is admissible and it must be quantified before making payment - Sundaram Motors (P.) Ltd. v. Ameerjan [1985] 152 ITR 64 (SC). Relief is admissible on arrears of salary paid under orders of court - Sant Raj v. O.P. Singla [1987] 163 ITR 588 (SC), K.C. Joshi v. Union of India [1987] 163 ITR 597 (SC). Where back wages are paid to assessee pursuant to striking down of termination order by court, relief is admissible - Satyapal v. Wool & Woollen Export Promotion Council [1988] 169 ITR 507 (Bom.). Compensation received consequent to resignation is also entitled to relief - CIT v. J. Visalakshi [1994] 206 ITR 531 (Mad.). Assessee is eligible to claim simultaneous benefit under section 10(10C) as well as section 89(1) in respect of compensation received under voluntary retirement scheme - CIT v. G.V. Venugopal [2005] 144 Taxman 784/273 ITR 307 (Mad.). Amount received by assessee on voluntary retirement in excess of Rs. 5 lakhs, which is exempt under section 10(10C), would be eligible for relief under section 89 as it is profit in lieu of salary within meaning of section 17(3)(i) - CIT v. P. Surendra Prabhu [2005] 149 Taxman 82/279 ITR 402 (Kar.). For details, see Taxmann’s Master Guide to Income-tax Rules.