Judgment :- V. RAMASWAMI, J. The assessee was a civil servant under the Government of Tamil Nadu and retired from service on 28th March, 1952. Originally his pension was fixed on Rs. 484.87 per men sum and was being paid at that rate. Later on in the view that the assessee was entitled to the benefits of the liberalised Pension Rules, 1950 in Government Order Ms. No. 1877 (Finance) dt. 23rd November, 1956 he was held entitled to a death-cum-retirement gratuity of Rs. 17, 820/- and a pension of Rs. 395.19. Accordingly in lieu of the pension, of Rs. 484.87, the pension was revised as Rs. 395.19 and death-cum-retirement gratuity payable at Rs. 17, 820/-This order was given retrospective effect from 28th March, 1952 when the officer retired from the service. 2. It appears that the difference between the sum of Rs. 395.19 which was payable under the revised fixation of the pension and the sum of Rs. 484.87 which was actually paid was adjusted from the death-cum-retirement gratuity of Rs. 17, 820/- and the pension subsequent to 23rd November, 1956 was paid at the rate of Rs. 395.19 per month. In pursuance of this Government Order re-fixing the pension, the assessment order for the asst. yr. 1952-53 onwards also was revised. Subsequently the Government revised the pension payable to the assessee in Government Order Ms. No. 356, (Finance) dt. 2nd April, 1959. Under that Government Order in lieu of the pension of Rs. 395.19 per month and the death-cum-retirement gratuity of Rs. 17, 820/- sanctioned in Government Order Ms. 1877 (Finance) dt. 23rd November, 1956 the Government granted w.e.f. 28th March, 1952 the superannuating pension of Rs. 526.94 per month. The Government also sanctioned w.e.f. 28th March, 1952 a special additional pension of Rs. 600 per annum in consideration of certain special services rendered by the assessee when he was in service. The said Government order also directed that the arrears of pension due to the officer under that order should be adjusted against the death-cum-retirement gratuity of Rs. 17, 820/- recoverable from him and the balance of death-cum-retirement gratuity should be recovered in 12 monthly instalments beginning from January 1959. 3. In the view that the death-cum-retirement gratuity of Rs. The said Government order also directed that the arrears of pension due to the officer under that order should be adjusted against the death-cum-retirement gratuity of Rs. 17, 820/- recoverable from him and the balance of death-cum-retirement gratuity should be recovered in 12 monthly instalments beginning from January 1959. 3. In the view that the death-cum-retirement gratuity of Rs. 17, 820/- paid in 1956 changed its character became arrears or advance of pension, the ITO initiated proceedings under s. 147 of the IT Act, 1961 in respect of the asst. yr. 1957-58 and made a revised assessment including the said sum of Rs. 17, 820/- in the total income. In an appeal preferred by the assessee, the AAC held that the provision of s. 147 were not applicable as the assessee had fully disclosed the said sum even in the original assessment. In that view he allowed the appeal and excluded the said sum of Rs. 17, 820/-. 4. In respect of the asst. yr. 1960-61, the assessee in his revised return filed on 9th April, 1962 admitted the pension of Rs. 6, 923.00, but the ITO considered that the arrears of pension due as per the Government Order dt. 2nd April, 1959 was also liable to the included in the taxable income of the assessee in the asst. yr. 1960-61 and worked out the arrears due at Rs. 16, 386/- being the difference between the original pension of Rs. 395.19 and the revised pension of Rs. 526.94 for the period from 28th March, 1952 to 31st March, 12959. This was in the view that the entire arrears became due only on 2nd April, 1959 in the accounting period relevant to the asst. yr. 1960-61. This assessment order was made when the appeal by the assessee against the inclusion of Rs. 17, 820/- in the assessment for the year 1957-58 was pending before the AAC. Therefore the assessment order relating to 1960-61 was really in the nature of a protective assessment. The Department did not file any further appeal against the order of the AAC in respect of the asst. yr. 1957-58 and that had become final. The assessee preferred an appeal against the order of assessment including the arrears of pension to the extent of Rs. 16, 368/- in his income in the asst. yr. 196-61; but without success. The Tribunal also confirmed the assessment. yr. 1957-58 and that had become final. The assessee preferred an appeal against the order of assessment including the arrears of pension to the extent of Rs. 16, 368/- in his income in the asst. yr. 196-61; but without success. The Tribunal also confirmed the assessment. At the instance of the assessee the following question has been referred :- "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of Rs. 17, 820/-, was assessable to income tax in the year 1960-61 ?" * At the outset it may be pointed out that though the ITO has included in his assessment only a sum of Rs. 16, 368/- as representing the difference between the pension of Rs. 395.19 as originally fixed in Government Order Ms. No. 1877, (Finance) dt. 23rd November, 1956 and the revised pension of Rs. 526.94 fixed under Government Order Ms. 356 (Finance) dt. 2nd April, 1959, in the appellate order and the Tribunal order the question was considered as if whether the sum of Rs. 17, 820/- paid to the assessee as death-cum-retirement gratuity is includible in the asst. yr. 1960-61, as if the gratuity amount has changed its character to arrears and advance of pension consequent on the Government Order dt. 2nd April, 1959. 5. It is seen from the facts that the confusion had arisen because of the original view held under the Government order Ms. No. 1877, (Finance) dt. 23rd November, 1956 that the assessee was entitled to the death-cum-retirement gratuity of Rs. 17, 820/- and a pension of Rs. 396.19 only. In view of he later Government order dt. 2nd April, 1959 which was given retrospective effect from 28th March, 1952 will have to be completely ignored and the facts will have to be ascertained and understood only with reference to the latter Government Order. The result therefore would be as follows. The assessee was paid a sum of Rs. 484.87 per month upto 23rd November, 1956 and a sum of Rs. 395.19 thereafter though he was entitled to a pension of Rs. 526.94 from 28th March, 1952 onwards. Thus the difference between Rs. 526.94 and Rs. 395.19 for the period subsequent to 23rd November, 1956 and the difference between Rs. 526.94 and Rs. 484.87 per month upto 23rd November, 1956 and a sum of Rs. 395.19 thereafter though he was entitled to a pension of Rs. 526.94 from 28th March, 1952 onwards. Thus the difference between Rs. 526.94 and Rs. 395.19 for the period subsequent to 23rd November, 1956 and the difference between Rs. 526.94 and Rs. 484.87 for the period prior to 23rd November, 1956 became arrears due only by virtue of the Government Order dt. 2nd April, 1959. Thus the entire arrears as calculated above became due and payable to the assessee on 2nd April, 1959 which is in the asst. yr. 1960-61. 6. Under s. 7 of the Indian IT Act, 1922. the income is chargeable in the year in which such arrears became due. Under s. 15(a) of the IT Act, 1961 also the arrears became chargeable in the previous year in which it became due whether it was paid or not. It cannot be seriously contended that the arrears in this case become due prior to 2nd April, 1959. It is by virtue of the Government Order re-fixing the pension on 2nd April, 1959 that the assessee became entitled to the difference between the pension originally paid and the sum of Rs. 526.94 re fixed by the Government. Therefore there could be no answer for inclusion of this arrears of pension in the asst. yr. 1960-61. But it is contended by the learned counsel for the Revenue that the arrears of pension will have to be calculated on the difference between Rs. 526.94 and the sum of Rs. 395.19 for the entire period and it is not possible to split up the period and calculate the arrears as stated above. According to the learned counsel the difference between Rs. 484.87 and Rs. 395.19 had already been adjusted by the Government Order dt. 23rd November, 1956 and that therefore he shall be deemed to have been paid only Rs. 395.19 right from 28th March, 1952 and the entire difference became due only on 2nd April, 1959. We are unable to agree with this contention of the learned counsel. The pension was paid at the rate of Rs. 484.87 till 23rd November, 1956. The difference between Rs. 395.19 and Rs. 395.19 right from 28th March, 1952 and the entire difference became due only on 2nd April, 1959. We are unable to agree with this contention of the learned counsel. The pension was paid at the rate of Rs. 484.87 till 23rd November, 1956. The difference between Rs. 395.19 and Rs. 484.87 which was adjusted against the death-cum-retirement gratuity was also paid to the assessee only as a pension and merely because that was once adjusted and now it has been found not adjustable it would not change its character and conert the amount payable as pension into that of gratuity. Therefore only the difference between Rs. 526.94 and Rs. 484.87 could be included as arrears of pension payable in respect of the period prior to 23rd November, 1956. The Tribunal will have to therefore re-calculate or get it re-calculated by the ITO as to the exact amount of arrears of pension which became due on 2nd April, 1959, for the purpose of indulging the same in the asst. yr. 1960-61. 7. It is stated that the legal representative of the assessee had filed an application under s. 89(1) of the IT Act, 1961. The Tribunal has found that he would be entitled to the benefit of the provision. We have no doubt that the ITO would give him the benefit available under s. 89(1). 8. For the foregoing reasons we answer the reference as follows : The difference between Rs. 526.94 and Rs. 484.87 for the period prior to 23rd November, 1956 and the difference between Rs. 526.94 and Rs. 395.19 for the period subsequent to 23rd November, 1956 would be assessable for the asst. yr. 1960-61 as pension which became due on 2nd April, 1959. As the assessee had substantially succeeded, he will be entitled to his costs. Counsel fee Rs. 250/-.