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Sujith Surendran
Salary
Directors
Company director is not a servant- A director
of a company is not a servant but an agent
inasmuch as the company cannot act in its
own person but has only to act through
directors whohave relationship of an agent
with the company -Ram Prashadv.CIT.
Professionals
Professionals rendering incidental services are
not servants- Where an assessee, deriving
income from profession as a musician,
incidentally rendered services to a college of
music, it could not be said that there was a
master and servant relationship -CITv.Jnan
Prakash Ghosh[1992] 62 Taxman 151 (Cal.).
LIC Officers
Incentive bonus/commission, whether taxable as
salary or as business income Since in addition to
salary payable to him, a Development Officer of the
LIC receives incentive bonus/commission based on
the insurance business promoted by him, but in
addition to the salary payable to him, the additional
income so derived by the Development Officer during
the course of and pursuant to the terms and
conditions of his employment, can be brought to tax
only under the head Salaries, and not under the
head Profits and gains of business or profession.
Judges
Salaries received by judges are taxable- The
salary of a Judge of a High Court and the
Supreme Court is income and is taxable by Act
of Parliament in just the same manner as is
the income of any other citizen.
It is true that such judges have no employer
but that,ipso facto, does not mean that they
do not receive salaries.
Arrears of salary
Salary due but not paid or taxed in earlier year is
taxable as arrears of salary in year of paymentSalary due to an assessee in the earlier years,
which was neither paid nor was charged to tax in
those years, will have to be treated as arrears of
salary within clause (c), and will have to be
brought to tax in the year(s) in which it was paid.
The said clause (c), broadly put, is intended to
catch such salary as has escaped the charge of
income-tax in earlier years -CITv.Sardar Arjun
Singh Ahluwalia (Decd.)[1999] 240 ITR 693/107
Taxman 246 (SC).
Retirement payments
Voluntary
retirement payments received in
instalments accrue in the initial year Where the assessee took up voluntary retirement
from a bank under a scheme which provided for
payment of only 50 per cent of theex
gratiapayment in the year of retirement and the
balance 50 per cent in annual instalments over the
succeeding years, the entireex gratiaamount
must be treated as salary which has accrued to
the assessee in the year of retirement -Y.S.C.
Babuv.Chairman
and
Managing
Director,
Syndicate Bank[2002] 253 ITR 1 (AP).
UN Pension
Pension paid by United Nations Organisations
is exempt- Pension amount received by U.N.
Pensioners is exempt from tax, since such
pension is nothing but salary -CITv.K.
Ramaiah[1980] 126 ITR 638 (Kar.)
Fees
Allowances
Receipts on account of CCA, HRA and DA are in nature of income
forming part and parcel of salary entailing tax liability
Karamchari Union v. Union of India [2000] 109 Taxman 1/243 ITR 143
(SC).
CIT v. Dr. P.L. Meyyappan [2000] 244 ITR 543 (Mad.)/CIT v. Dr. A. Mani
[2000] 244 ITR 546 (Mad.).
CIT v. Dr. Miss Pauline E. King [2000] 243 ITR 300 (Mad.).
Perquisites
Unauthorised advantages are not perquisites Any unauthorised advantage taken by the
employee (like clandestine use of employers
car by employee) without the authority of the
employer would only create a legal obligation
to restore such advantage and therefore such
an unauthorised advantage will not amount to
a benefit or advantage within the meaning of
section 17(2)(iii)
Car Perquisite
Where the Assessing Officer was unable to obtain
the details of the actual expenditure incurred by
the company on the maintenance and running of
the car, and had not also gathered information
about the type of car and whether the car was
exclusively for personal use of the director or for
the use for purposes of the company as also for
private use, the Tribunal would be justified in
adopting the method prescribed in the Table in
rule 3 for valuing the perquisite
CIT v. Reliance Industries Ltd. [2008] 175 Taxman 367/[2009] 308 ITR
82 (Guj.).
MEDICAL REIMBURSEMENT
V.M. Salgaocar & Bros. (P.) Ltd. v. CIT [2000] 110 Taxman 67/243
ITR 383 (SC).
OTHERS
Salary paid to servant : New rule 3 - The employee is taxed on
perquisite in respect of provision of a servant by the employer
which is equivalent to the monetary benefit he receives. The
servant is required to pay tax in respect of income he/she derives;
and the employee is required to pay tax in respect of the perquisite,
which is equivalent to the monetary benefit he receives. If the
service of a servant is not made available to the employee by his
employer, the employee will have to spend from his/her pocket for
the salary of a servant, if he/she intends to have one. Further, if the
employee does not intend to have one, it is open to him/her not to
have the services of a servant from his employer. It is optional.
Therefore, adding of salary of the servant provided by the employer
deputed to the residence of the employee as perquisite in hands of
the employee would not amount to double taxation
Gwalior Sugar Co. Ltd. v. CIT [1997] 224 ITR 321 (MP).
Purchase of deferred annuity policies - Where employercompany purchased single premium deferred annuity policy
out of commission payable to employee-managing-directors
(assessees) in their names, amounts utilised for obtaining
deferred annuity policies would form part of remuneration
payable to assessees and as such be chargeable under head
Salaries
CIT v. Navnit Lal Sakar Lal [2000] 113 Taxman 692 (SC).
Special Bonus on retirement - Amount paid by assesseecompany to its executive director, at time of his leaving
company as special bonus for exceptional services rendered by
him, is profit in lieu of salary under section 17(3)
J.K. Helene Curtis Ltd. v. CIT [1999] 103 Taxman 162 (Bom.).