1. Two questions are referred to us by the Commissioner of Income-tax:

(1) Whether the sum of Rs. 8,256 paid to the assessee by the Government of Madras on March 12, 1930, is income liable to tax, and

(2) Whether the said sum is exempt from tax under Clause (v) or Clause (vii) of Sub-section (3) of Section 4 of the Act.

2. The facts are as follows:--The assessee was an Assistant Engineer in Government service. In 1923, he with other Assistant Engineers was compulsorily retired. His retiring age was 55 and he would have reached that age in 1927. He was thus compulsorily retired from service four years before he should have been. He and the others similarly compulsorily retired presented memorials to the Government of India and the Secretary of State for India setting forth their grievances and this resulted in the issue of the following order by the latter which was published by the Government of Madras on the 8th March, 1930, vis., that the assessee should receive as compensation (1) a lump sum equivalent to two-thirds of the difference between the amount received by him in pension from the date on which he was discharged to the date of attaining 55 years of age and the amount